Tree Trimming Business
October 04, 2023
by a searcher in Queen Creek, AZ, USA
Hey Community, I am under contract to purchase a Tree Trimming business and looking for any major things to avoid or look out for. The business has been around for over 25 years and has a great reputation. It is very much operated in an old school way with no website, marketing or any software tools for operating efficiencies.... so huge growth potential. But I don't want to get blindsided by the shiny growth objects and miss any red flags of the industry / macro market aspects. Anything that you all would suggest to look at or talk through before we get out of DD? Thanks in advance!
from Swinburne University of Technology in Melbourne VIC, Australia
1) What sort of equipment do they have? The equipment will dictate what "sandpit" you play in (residential, commercial, clearing etc...) and it's bloody expensive items. So make sure that you don't go in thinking you'll target commercial if they have equipment (trucks, chippers, stump grinders) that are "residential" size (and vice versa).
1) a) still on the topic of equipment, get a good understanding of # of hours they have, how many hours they run per week etc... Again it's a major source of expenditure and you want to have eyes wide opened with regards to how soon you'll have to make those purchases (it came a lot sooner than I expected for me for instance).
2) What sort of skills in the crew? Great climbers are like great software developers, they'll make any job much easier and should be kept and compensated appropriately! Are they contractors or full time employees? How many crews are they running?
3) Based on the above, what's the utilisation rate of the staff? Take into account equipment maintenance etc...
There's a lot more of course, but this is getting long already! It's a fun industry to be a part of (here in Australia anyway), let me know if you want to chat more.
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Secondly, from a lending standpoint if you are not specifically experienced in the industry, lenders are going to want to know you have key personnel to manage the business going forward. Tree trimming takes specific expertise and training. Be sure you have the management team lined up to operate the business going forward and retain any required licenses.
Lastly, I would be sure you verify the condition and age of the equipment. Much of the equipment can be very expensive to replace in this market and you want to be sure you have either left room in the EBITDA to cover future CAPEX needs or verify the equipment is in good shape with some years left on it.
I hope this helps. I am sure there are more, but these are the things that popped in my head first thing from past experience. Good luck.