# Buying an existing tree business any advice?



## Uzi (Jun 1, 2015)

I'm looking at buying an established tree business, looking for input from others that have done something similar.

Equipment included in the sale.

89 Ford bucket truck 55' WH material handler diesel engine 93k miles 5500 hrs. A few dents and dings on the body but solid boom no leaks or issues.

Morbark 2400XL chipper 12v cummins runs out and chips good.

80's? F-700 chip truck very straight for an older truck runs well v8 gas motor

Vermeer 665 stump grinder 

Saws include a Stihl 660 460 362 and a couple top handles 150's 
3 hydraulic saws that run off the tool circuit in the bucket.
Power washer, chain, lots of spare knives, belts and parts for the trucks, chipper, and grinder etc.

Ropes, rigging equipment, harnesses and lots of other related gear. 

The previous owners are my wifes family they are certified arborists, and line clearance certified in Nebraska. They have an A+ rating with BBB and have been doing this for quite a while. They built it from scratch and are heading towards 60 years old and no longer wanting this much labor.

Price is $95K I get a loan for 60K they carry 35k on somewhat flexible terms. 

I've got a lot of experience with saws and have been running a firewood business on the side for a few years but somewhat limited experience in a bucket and rigging. I've done both but not in amounts to feel proficient. They have offered to stay on training me until I feel comfortable with all aspects of the work.

My Wife and I are planning on working it together and being the sole labor force. I'm am currently self-employed in a partnership that runs 2 feed stores and my hours are somewhat flexible there with peak season for that business being dead of winter. My wife does accounting for a school district with 4 day weeks in the summer and 5 day weeks during the school season. 

My main question is can we make this work on a part time basis? Since we both have jobs that are good and we aren't expecting to take much of a wage out at the beginning. Hoping mostly to get equipment paid down ASAP maybe a little bit of equipment updating or reorganizing. Then being able to see some more serious profits after the 5 year mark which is the loan term we are looking at. We are both in our 20's highly motivated, in shape and between our 9-5 jobs and the firewood business we are used to and capable of working 7 days a week when necessary.

Any thoughts or experiences appreciated.


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## johnny5ny (Jun 1, 2015)

100 large is a lot of corn for a young couple/family. Enough IMO to warrant a sit down with a professional to "really" determine if the equation balances. 

Just my 2 pennies, so take FWIW...


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## pro94lt (Jun 1, 2015)

How much tree work have you done? And the bbb means nothing. At least not around here.


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## I'llbearealclimberoneday (Jun 1, 2015)

I wouldn't touch it. Payments on a $60000 loan on top of payments for a $35000 loan is an extra house payment a month. Piecing together a similar setup for $95000 gets you the same thing but with trucks that are 12 or so years newer. used saws and used climbing gear isn't worth much to a lot of people. YMMV.

What's the revenue from the company?


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## ronnyb (Jun 1, 2015)

Definitely need to know what they were grossing,.


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## BC WetCoast (Jun 1, 2015)

The value of buying an established company is in the experienced crew, company name and the customer list. Equipment can be easily acquired by anybody with a decent credit score. So, you are not getting any crew, therefore you are paying 100k for the equipment and customer list. You're only planning on running this part time with your wife, so why buy all the equipment? Most of it will be sitting around, costing you money. 

Has the boom been inspected, dielectrically tested? 

How is your sales ability?

Can you do anything but removals ie pruning or hedges?

In my opinion, you're going to be up against the wall. Cash flow will be vital or that loan will kill you. I think you're biting off more than you can chew at this point.

If you really just want a part time gig, just buy the stump grinder.


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## lloyyd (Jun 1, 2015)

No way I'd go that far into debt for just a part time gig, no matter the profession.


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## no tree to big (Jun 1, 2015)

My part time gig has roughly 5k invested.... no grinder though or bucket but yo don't need no stinkin bucket. 
Are you a good mechanic? Trucks that old will have all kinds of issues that pop up, guaranteed! I've used trucks from that Era and they always have issues all kinds of really anoying issues.


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## Uzi (Jun 1, 2015)

I appreciate the replys, general consensus is that the price is too high? I should have probably stated in my first post that I've talked with a banker and figured my monthly payments to be around $1200 on the 60k at 5 years term. I've also got the option to pay annual, bi annual, or monthly. I already have a great working relationship with this bank in my other business. But I also realize that because I can get a loan on it doesn't mean its a good business decision. 

The current owners also have 9-5 jobs and work weekends only like we had planned to continue. Being self employed already I might have slightly more flexibility than they did. They grossed around 55k working around 40 weekends a year.

To answer other questions I was a diesel mechanic for 5 years before becoming self employed. I saw the older equipment as a plus not because of its value(obviously it's lower) but because I could do all the work on it with out computer software. I do realize it will require more work as it ages but it would all be work I could do myself.

As far as work being done it would removals, trimming/pruning, and ROW clearance. They have a $20k+ Power line clearance contract that is just finishing up. I've got to help with a fair amount of it and a few residential removals with some rigging involved we've been working with them around 2 months now.

Do the details change any opinions? Still paying too much for to little?


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## Uzi (Jun 1, 2015)

I should also add that we are in a situation where we don't need this to produce profit right away. Obviously the goal is to get it there as quick as possible. But we don't need it to pay for anything other than the equipment itself. We are willing to put in the work without return initially to get it up and going with idea that it pays us back in the long term. Am I going about it the wrong way?


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## no tree to big (Jun 1, 2015)

55k annual sounds like a 55k purchase price tops, if you had better equipment, more like 30 or 40 for what is being offered... do you get yard space?
You have a lot to learn even after your 2 whole months experience... how are logs removed from site? If you are hand loading your 2 person workforce will get tired pretty damn fast.


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## fordf150 (Jun 1, 2015)

I read somewhere about business valuations for small business. Can't remember exactly how it went but it was something like this.

Fire sale...what can you get out of the assets if you sell them fast/at auction.

Asset value....what the equipment and property is worth.

Perceived value...Asset value plus revenue/profit...this would be the highest valuation for a company.

Don't know much about the tree trimming biz or the value of the equipment used in it but I would say your easily in that perceived value category.


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## I'llbearealclimberoneday (Jun 2, 2015)

They grossed 55K?

Vehicle registration, insurance, fuel, saw repairs, broken parts, boom maintenance, dump fees....... then split whats left if anything amongst "Them". You'd be better of with an S10 and a mower. The gross would be the same, but about $90000 less expensive initially and easier to maintained and store.


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## Uzi (Jun 2, 2015)

Yes 55k gross for about 70-80 days worth of work after payments, fuel, repairs, maintenance, insurance, taxes etc they netted about 20k. Average of $250 take home per day which isn't much but it wasn't losing money. This was working weekends only, and not every weekend at that. Another thing I should mention is that I'm in a sparsely populated area of central Nebraska. There isn't any company I know of in 100 miles of here that does full time tree work, not enough demand or climate to allow it.

After talking with my CPA yesterday I feel like I've got most of questions answered on the money end of things. 
Any opinions on what a fair value of the above equipment would be? Is there a KBB or NADA equivalent for tree related equipment.


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## I'llbearealclimberoneday (Jun 2, 2015)

That clears up some confusion then. You had me thinking that amount was for 40 full weeks of work haha. that math wouldn't have paid a groundman.

Not sure of an equipment pricing site, but I always just look for the closest model listed and price it around that. Ultimately, its worth what some one is willing to pay for it. Ive been trying to sell an F250 4WD for 3600 and haven't had a bite. Its probably worth 5k somewhere else


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## Uzi (Jun 2, 2015)

I'llbearealclimberoneday said:


> Ultimately, its worth what some one is willing to pay for it. Ive been trying to sell an F250 4WD for 3600 and haven't had a bite. Its probably worth 5k somewhere else



This is very true I don't know that this stuff would bring close to what they're asking if it was on the coasts where the climate is different and tree work is needed everywhere. To see a bucket truck around here is rare unless it belongs to a power company and a chipper is rarely seen either.

That truck would bring 5k here all day long but any 3/4 ton 4x4 that runs and drives is a hot item.

Right now I'm working a deal to buy the equipment at a lower price minus the bucket truck. I found a newer lower mile truck one state over that is a 70 foot truck and since I live in an area dominated big cottonwoods I think that might do me more good. Most of this is still up in the air and I've not signed the line on anything yet. Still talking with them, the banker and CPA. And also trying to get a better feel for what the market will bear in this area. I'm very lucky to already be involved with a great business that gives me the flexibility to consider this one. And the fact that the owners are my wife's family there isn't pressure to do something fast or danger of them having ill intentions towards us.

If I get a deal done I'll update here to let people know how it went or how bad I'm losing my A$$


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## Zale (Jun 2, 2015)

If you want your marriage to last, do not work with your wife. Trust me on this one.


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## no tree to big (Jun 2, 2015)

Zale said:


> If you want your marriage to last, do not work with your wife. Trust me on this one.


Yea but think you could spend lunch in the back of the chipper truck... [emoji131]


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## jefflovstrom (Jun 2, 2015)

You will need to hire a climber, there goes your $250 a day.
Jeff


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## BC WetCoast (Jun 2, 2015)

So out of the 55k gross, there was a 20k+ power line clearing project that you won't be able to work on because you're not certified. That would leave a 35k gross and 0 net. Which leads me back to my initial question, how good is the customer list and how good are you at sales?


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## jefflovstrom (Jun 2, 2015)

You can not sell a customer list, they are not obligated or retained,,you better think this out better,,(you are not FTA,? right,,),,
You need help, that cost money. Good luck,,,
Jeff


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## jefflovstrom (Jun 2, 2015)

BC WetCoast said:


> So out of the 55k gross, there was a 20k+ power line clearing project that you won't be able to work on because you're not* certified*. That would leave a 35k gross and 0 net. Which leads me back to my initial question, how good is the customer list and how good are you at sales?



You mean 'Qualified"
Jeff


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## Uzi (Jun 2, 2015)

Zale said:


> If you want your marriage to last, do not work with your wife. Trust me on this one.


Haha I know some people might call me crazy but I wouldn't even consider this without her. She can operate any equipment from skid steers to trucks including a feed truck I've got with an eaton fuller split 13 speed. She can pull trailers, load trailers, run big saws (2100, 288 30" plus bars) and work right beside me on a 10 hr. Day without missing a beat. She is truly my equal in every area aside from brute strength which is fine I don't want to look like a bodybuilder



jefflovstrom said:


> You will need to hire a climber, there goes your $250 a day.
> Jeff


If the deal goes through I will train under the certified arborist until I can get certified and until I'm am competent to handle the climbing myself. Like I said above I'm lucky enough to be in a position to learn from him without needing a paycheck from it.



BC WetCoast said:


> So out of the 55k gross, there was a 20k+ power line clearing project that you won't be able to work on because you're not certified. That would leave a 35k gross and 0 net. Which leads me back to my initial question, how good is the customer list and how good are you at sales?



I don't know if I will become line clearance certified or not depends on the need for it in my area. We are moving the business about 75 miles from it current location if we go through with the purchase. I feel we could retain a good number of current customers that are closer to my area. I will be in an area that has little competition that is certified or insured.

I feel pretty good about my sales ability as my full time job is 2 feed stores. We call on a large number of people (250+) in a 175 mile radius and gross 350k+ per year. Hoping some of that retail knowledge will transfer over to this.


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## no tree to big (Jun 2, 2015)

jefflovstrom said:


> You mean 'Qualified"
> Jeff


To bad our industry doesn't revolve around the term "qualified arborist"


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## jefflovstrom (Jun 2, 2015)

no tree to big said:


> To bad our industry doesn't revolve around the term "qualified arborist"



I was talking about line clearance,,
Jeff


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## fordf150 (Jun 2, 2015)

This is the problem with buying/selling any small business. Usually the "value"of the business is based on the owner running it. Take the owner out of the equation and your left with nothing. Not trying to butt in but you can buy the equipment way cheaper and hire a qualified climber to help and come out better than the deal your getting. Those customers you think you can retain may be loyal to the owner....not the company so don't count on retaining them plus these customers aren't like your feed store customers that You have to call on every few weeks. Tree trimming customers only call you when they need you.

Not trying to rain on anyone's parade but think long and hard before committing yourself. I know all too well how easy it is to talk yourself into something.....I just did it myself with a Dyna firewood processor that I purchased last year


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## jefflovstrom (Jun 2, 2015)

jefflovstrom said:


> I was talking about line clearance,,
> Jeff


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## jefflovstrom (Jun 2, 2015)

They make you take take your hat off for the pic,,,
Jeff


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## greg storms (Jun 2, 2015)

My wife was a collections manager at a bank with 7 branches. She often tells me stories of customers who do well in one big venture and try to expand. Too fast, too soon actions complicate matters and oftentimes lead to bankruptcy. Think it through.... Good Luck!


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## TheJollyLogger (Jun 3, 2015)

I' m just not seeing it. 90k for 30k worth of equipment, a customer list 75 miles away based on their reputation, in an industry you have 2 months experience in. If they were grossing. 55k you'd better plan on 40 at best the first year or two, especially since you don't have your certs. At 55k a year, you aren't buying a business you're buying someone's hobby. Not to mention doing business with the in-laws is a recipe for disaster.


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## treecutterjr (Jun 3, 2015)

Get the 60k loan. 
Spend $15k on a nice mini w/grapple. 
15-20k on a nice chipper
10k-15k on chipper truck

Still have 10 -15k left over. 
Hire climber when needed. 
Rent stump grinder or crane when needed. 
If you are just doing weekend workyou will be good.


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## Uzi (Jun 3, 2015)

No good options on renting a stump grinder around here it would be about 100 miles round trip to get one. 

How do I go about determining a fair value on the equipment? Everyone says it's too high but by how much? To go bucket truck, chipper, or grinder shopping means taking time from the other job and going to Des Moines, Denver or maybe Omaha. I would rather try to make a fair offer on this since I already know it's condition and maintenance history. Doesn't mean they will take it but it can't hurt to try right? Plus buying from them gives me a already certified arborist to learn from vs going buying my own stuff and winging it. He's willing to stay on training me until I'm comfortable which in my mind is worth something right?


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## I'llbearealclimberoneday (Jun 3, 2015)

They make stump grinder attachments for skids. IME, they get it done. For the price of a good sized grinder, you can outfit a skid. Skids will grind stumps, pull trees over, pull fence post, demo driveways and load logs......


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## kyle1! (Jun 3, 2015)

Uzi said:


> He is willing to stay on training me until I'm comfortable which in my mind is worth something right?


 
Your FIL wants to retire so he has placed a high $$ amount on the sale of his business in the hopes someone will take the bait. Throw out the relationship/emotions for a minute and what do the numbers tell you? Customer lists are not a guarantee of future revenue and if you priced the equipment out it maybe worth up to $20-30K. So you are going into debt for $60k on a customer list and his training?? 

I wonder what it would cost to hire someone to train you to become a certified arborist? $1k, $5k, 10K, 15k? I do not know what it takes but isn't it some classes/tests and you get a certificate?

If you want to be in the tree biz start off small doing weekend work, like the business you want to buy, without going into huge debt. That way if that venture fails it is easy to let go. $350k gross on a couple of feed stores....so you made $40k net 

Goodluck in your decision.


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## BC WetCoast (Jun 3, 2015)

jefflovstrom said:


> View attachment 428378
> View attachment 428379



It may be different here. CUA - Certified Utility Arborist

http://www.eiti.bc.ca/Certified_Utility_Arborist.html


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## pro94lt (Jun 4, 2015)

Run run run... that old equipment all needs retired...


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## KenJax Tree (Jun 4, 2015)

For weekend work all you need is a nice 1 ton and a chuck and duck.


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## Tree94 (Aug 27, 2015)

I know this is an older thread, but dam that seems like you'll be biting off more than you can chew...

Did you ever do it??


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## Uzi (Aug 28, 2015)

I did get into the tree business but I didn't buy this business. I do occasionally still go out with them to learn from them. I bought my own truck in July and I'm booked up with all the work I can keep up with and then some. Got our insurance squared away and have been working every night and weekend since. I would have liked to have some of their equipment and I don't know if that will be an option in the future but the payment would have been a big one for someone only working part time. I still think it would have paid for itself but the downside I would have been providing the labor for free or next to nothing and probably for several years until things got paid down.

I really appreciate all the advice here.......I think it helped me make the right choice by starting a little smaller it might prevent me from working myself to death to make a huge payment.

Here's the truck I bought 1998 FL80 8.3 cummins 45k miles 3900 hrs 73ft work height 1500lb. material handler. Its been great so far.


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## pro94lt (Aug 28, 2015)

What's the gvwr of that truck?


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## Uzi (Aug 28, 2015)

16,000 front 
40,000 rear

56k total haven't weighed it empty to see where it's at as far as adding saws gear etc but it should be plenty I don't have that much stuff yet.


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