Standard for purchase priceof business

allmark

Well-Known Member
Does anyone know of a "norm" for this industry for purchasing a company.ie.1 1/2 annual sales etc. or any experience you might have? obviously I dont care about someones particular #s but maybe how they were arrived at.
 

rborist1

New Member
Location
Canada
Talk to an accountant, there is a formula that they use. I just got my company valued by my accountant. /forum/images/graemlins/laugh.gif
 
the need for a database of repeat versus one time clients is tremendous in negotiating sale of a business besides the equipments value and any crew that may be included in the sale.
also the cost of your time to assist the new owner in taking over the operations.
 

treemann

Member
Location
NW Indiana
I talked to someone last year that has bought several tree care companies and they told me that the norm is between 35 and 60 cents per dollar of one year gross income.
 

Colin

Administrator
Administrator
Around here they're worth F'all.

The accepted starting point is 1 years Gross (after expenses but before tax) plus P&E.

The problem with buying them or selling them for that matter is that if the owner was the climber it's worth a lot less, and not many people like to buy a business these days that involves such extrenuous physical work and risk.

The ususal mentality is why should they buy rather than just use their money to start fresh. We all know the answer to that but many dont see value in goodwill and believe they can create their own quickly.

What seems to be the key selling point is existing contracts for work. For example if you have a 3 year contract to local councils or power company etc.

Also, any idiot can compete against you, a chainsaw and a trailer .... they're your competitor.

So, what's your business worth? It's worth whatever anyone will pay for it ... and it can be zero if there's no buyers.
 

allmark

Well-Known Member
Thanks all. Im looking at buying. I cant get qualified people so i was talking to another climber that started 2 years ago about coming together with me. He has the same problem so I was considering this as an option.
 

Matt_Harmsworth

New Member
Location
SE UK
[ QUOTE ]
Around here they're worth F'all.

The accepted starting point is 1 years Gross (after expenses but before tax) plus P&E.

The problem with buying them or selling them for that matter is that if the owner was the climber it's worth a lot less, and not many people like to buy a business these days that involves such extrenuous physical work and risk.

The ususal mentality is why should they buy rather than just use their money to start fresh. We all know the answer to that but many dont see value in goodwill and believe they can create their own quickly.

What seems to be the key selling point is existing contracts for work. For example if you have a 3 year contract to local councils or power company etc.

Also, any idiot can compete against you, a chainsaw and a trailer .... they're your competitor.

So, what's your business worth? It's worth whatever anyone will pay for it ... and it can be zero if there's no buyers.

[/ QUOTE ]

Eric, for the first time in a long time I agree with you 100%. Don't listen to accountant valuation, more than likely it's BS.
 

Tree_Guys_Wife

New Member
Re: Standard for purchase price of business

Generally it starts at 1 year gross. That being said, it can be more or less depending on:

- value of equipment
- value of tools
- value of employees - eg: was the owner the main
climber/source of income for the company
- reputation of company
- how long company has been in business (phone number,
name, etc)

and of course, as Ekka said, bottom line is it's worth whatever someone will pay for it.
 

Brian

New Member
Re: Standard for purchase price of business

If you don't have a good reputation you are not worth a dime. You might as well sell it off one piece at a time. Client list too.
 

Matt_Harmsworth

New Member
Location
SE UK
Re: Standard for purchase price of business

Trouble is if you buy an established small business once the client list find out the main man is gone most go elsewhere. In my opinion the client list is the most important thing when looking to buy a business.
 

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