Stump Man
ArboristSite Operative
I have a chance to sell my busines. I'm trying to figured out whats it worth. I know what equipment is worth but what is rest of business worth. Is there a percentage of gross income that you use ? Thanks
What is Company Worth ??
- Thread starter Stump Man
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Newfie
Addicted to ArboristSite
What advice has your accountant offered? A competent business accountant should have no problem helping you with these kinds of things. They will also be able to help you plan for the tax ramifications.
John Paul Sanborn
Above average climber
For taxes, many will sell the buisness over several years, in essance you finance the sale. Sometimes this allows the seller to have a say in how the buisness operates too.
It all depends on the type of accounts you have, if you are a $100K per year company that chaces bids all the time, your value is less then the guy who has 70% of 75k in revolving accounts.
Sometimes the client list is more valuable then the rolling stock, sometimes the name and reputation alone can have a significant value.
Shop for accountacnts to see if your assets are worth the cost of the evaluation.
It all depends on the type of accounts you have, if you are a $100K per year company that chaces bids all the time, your value is less then the guy who has 70% of 75k in revolving accounts.
Sometimes the client list is more valuable then the rolling stock, sometimes the name and reputation alone can have a significant value.
Shop for accountacnts to see if your assets are worth the cost of the evaluation.
Stump Man
ArboristSite Operative
I haven't talk to any accountant yet. The company is 75 years old this year and we do just mosquito control spraying and stump grinding so most of the value is in customer list which many customers have been with us for over 30 years. The gross is around $185,000. trying figure a percentage on that, Thanks
NebClimber
ArboristSite Operative
price = [1 year's gross] + [equipment/inventory/facilities]
This is a very crude rule of thumb.
This is a very crude rule of thumb.
A very wet wild dream rule of thumb IMHO but I am no financial wizard. I save my wizardy for trees. Like you said, crude.
If you get 1x yearly you are doing GREAT.
Tree biz don't sell like others.
The family biz I grew up in sold for 2x yearly but the held a lot of patents, trade secrets, repeat customers....
I would say price = (equipment/inventory/facilities) + (good will)
The good will is what you need to figure out.
Good luck, that is just my .02 and again, I climb trees for a living.
Contact a pro.
treeman82
Addicted to ArboristSite
I like the idea of getting a percentage of the sales for a couple of years. Like that, you still have some control, and the more they grow, the more money you make.
John Paul Sanborn
Above average climber
It's not a % of sales, maybe of net, usually structured as a buisness loan. The sellor gets 2 double benefit from lower taxation and then interest from the financing.
I've met guys who stay on to make some of the sales for a few years to ensure that the clientel stays with the company. They get to work short weeks but still stay somewhat buissy.
I've met guys who stay on to make some of the sales for a few years to ensure that the clientel stays with the company. They get to work short weeks but still stay somewhat buissy.
In many businesses you could get 3 years gross. I think 1 yr gross + everything sounds about right and like it should sell. I live in a town of over 200 tree businesses (that is just the yellow pages) and over the last 2-3 years less than 5 actually went on the market. I would actually consider buying only about 5 companies in town but they will not sell. To have a high value business build a strong customer list, and use a professional accounting system. I would love to buy a good established tree business, but the ones I've looked into were run like crap, and have no books or paper to actually back up the claims of the owner. A buddy of mine bought a customer list and a yellow page add from an out of business tree guy for $10k, in the first year alone he made over 40k from that little purchase. I would love to find a deal like that.
ScottyStump
ArboristSite Lurker
Good Faith
You are essentially selling your phone number or what is called GOOD FAITH. Good Faith is the reputation you have established over the years. It is an intangible.
The price for your business is really what someone is willing to pay for it and the options are endless.
You may option to stay on and keep the business rolling, you may shake the new owners hand and say goodbye, you may do a payment plan(beware of this).
Remember, you built your business and many customers choose your business because of YOU. Therefore once you leave there is a chance the business could suffer, real good chance.
My personal advice, talk to your accountant regading preparing your books(any buyer will want the books). If you don't have books , you can't prove the solvency of the business. And then , yes you need to call a lawyer who has done this before to help you prepare a contract.
Good Luck.
-Scotty
You are essentially selling your phone number or what is called GOOD FAITH. Good Faith is the reputation you have established over the years. It is an intangible.
The price for your business is really what someone is willing to pay for it and the options are endless.
You may option to stay on and keep the business rolling, you may shake the new owners hand and say goodbye, you may do a payment plan(beware of this).
Remember, you built your business and many customers choose your business because of YOU. Therefore once you leave there is a chance the business could suffer, real good chance.
My personal advice, talk to your accountant regading preparing your books(any buyer will want the books). If you don't have books , you can't prove the solvency of the business. And then , yes you need to call a lawyer who has done this before to help you prepare a contract.
Good Luck.
-Scotty
