Snow removal company valuations in Canada

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by a searcher from Ivey Business School at Western University
in Toronto, ON, Canada

4yrs ago

Snow removal company valuations in Canada

Has anyone valued snow removal companies in Canada? Looking for an idea of expected margins.

Saw two snow removal businesses fold in Collingwood this year - homeowners now jammed paying an extreme range ($250/season up to $1500/season in the same zipcode) - assume route optimization drives margins, what is a "good" margin in this space?

thanks

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reply by an investor 4yrs ago
from Indiana University at Bloomington in Austin, TX, USA

You'd like value these in much the same way as a landscaping business. BVR has some examples of these cos: redacted

reply by a searcher 4yrs ago
from University of Western Ontario in Toronto, ON, Canada

I worked on the investment team for a PE fund that acquired one of the largest snow removal companies in Canada and were rolling up other players in the space. Generally speaking, EBITDA multiples are relatively low (3-5x) due to capex needs, seasonality, increasing labour costs/shortages. However, the well run companies in this space have gross margins of 40%+. Higher valuation premiums are given to companies with:
- long-term contracts (or recurring contracts) with blue chip customers
- high proportion (80%-100%) of B2B business
- newer/sophisticated fleet
- mix of fixed and variable contracts
- and of course, the usual positive characteristics (good management, high cash flow, etc.)