The landscaping industry has grown substantially and has excellent projections moving forward. This creates a market where there are many intrigued investors, which leads to an excellent time for many landscaping company owners to plan and follow through with their exit strategy. Learn how to sell your landscaping business including industry data, how to value your landscaping company and why you should work with a business broker.
About The Landscaping Industry
Landscaping companies generally offer a wider range of services than lawn maintenance service companies (see below). The industry has grown substantially and should continue to experience growth. Despite a relatively low barrier to entry, companies that have shown excellent sustainability often receive excellent valuations and have no trouble selling at or above FMV. The most notable landscaping industry numbers and projections are as follows:
- There are approximately 659,000 landscaping companies in the U.S.
- There was a 5.3% annual growth for the landscaping industry from 2018 to 2023
- The landscaping industry generates $128.8 billion in annual revenue
- The annual profit for the landscaping industry is $10.4 billion
- Experts predict a sizable increase in annual growth (2.5%) from 2023 to 2028
Since the ability to replicate the business is fairly easy, owners must focus on separation from their competition. Those that are able to do so are far more valuable, especially if they have the profits to reinforce their unique advantage within the industry.
Lawn Maintenance and Service Industry
The lawn maintenance and service industry has remained stable with excellent growth potential. The industry involves a range of potential services, including but not limited to lawn mowing, trimming, tree and shrub planting, gardening, weed control, and mulching. As a general rule of thumb, companies within the industry sell for between 50% and 60% of their annual sales plus inventory, 2 to 2.75 times their SDE plus inventory, or 2 to 4 times their EBITDA.
How Do I Determine The Worth of My Landscaping Business?
You can determine the value of your landscaping company with a professional market-based valuation from an experienced business broker. This involves your SDE and rule of thumb data. Below is the rule of thumb data (acquisition multiples) for landscaping companies (and similar business models):
- Landscaping companies sold between 1.86 and 3.05 times the Seller’s Discretionary Earnings (SDE)
- Landscaping companies sold between 2.27 and 4.39 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Landscaping companies sold between 0.41 and 0.58 times the annual net sales
What is The Sales Process for a Landscaping Business?
The sales process involves a range of steps, which may vary based on the specifics of your landscaping business and your exit strategy goals. The four steps you can expect and plan for include the following:
- Exit strategy planning
- A confidential marketing approach
- Finalizing a purchase deal
- Closing the sale
Exit Strategy Planning
The first step is to prepare for the sale. In fact, a large portion of the work happens before you list your landscaping business on the private market. This makes the sales process much easier and increases your chance of a fast and stress-free sale for fair market value. Notably, the pre-marketing stages include but are not limited to:
- Receive a professional business valuation
- Determine your exit strategy goals
- Develop a marketing approach and strategy
- Collect your legal and financial documents
Specifically, you should collect your federal tax returns, profit and loss (P&L) statements, cash flow statements, balance sheets, employee lists, client lists, and inventory information.. You may have already gathered many (if not all) of these documents before your professional valuation. After a detailed review of your company’s information ad your purpose and goal for selling, you and the rest of your team (i.e. your broker, attorney, and CPA) can put together a personalized sales approach that maximizes your chance of success.
A Confidential Marketing Approach
This second stage involves bringing your company to market in a confidential manner. Keep in mind, selling a landscaping service company is different in the sense you are not utilizing public marketing channels. Instead, your broker will do all they can to ensure news of your potential sale is not disclosed to the public. They can ensure this is the case, while also ensuring your sales memo reaches the eyes of hundreds of prospective buyers, by leveraging the connections, contacts, databases, and networks they have developed.
Finalizing a Purchase Deal
There is much to be done between the time your company goes to market and the sale is complete. The notable steps that are involved with finalizing the purchase include the following:
- Negotiate the purchase details
- Plan contingencies
- Receive a signed letter of intent (LOI)
- Complete due diligence
- Schedule a time to close the sale (see below)
Your broker can assist you through each of these processes. Specifically, they can help negotiate a deal that maximizes the sale price, allows you to reach your other exit strategy goals, and ensures you move to close as quickly as possible by monitoring the due diligence process.
Closing The Sale
Once a deal is in place, the sale closing is scheduled at a time all involved parties are able to attend. During closing, the purchase agreement is reviewed by all parties (for a final time) and the final signatures are attained. The purchase is also transferred to the seller, and the landscaping company’s ownership is transferred from the seller to the buyer, which completes the sale process.
Contact Us for a Free, No-Obligation Business Valuation
Do you want to sell a landscaping business? With years of experience and hundreds of businesses sold for fair market value or higher, you can trust the brokerage and consultancy team here at Sigma Mergers and Acquisitions. If you have questions or are ready to get started, contact us today. We can schedule a time for a consultation and get started with your landscaping company’s business valuation.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
Feel free to reach out!