Nashville Landscaping with $3MM in Secured Work
Commercial landscapers working in Nashville and the surrounding areas, this company has many long-term customers and a positive reputation to build upon. The $1.2MM in assets include all machinery, tools, and vehicles necessary for operations. Working only for commercial clients, services include general landscape design, irrigation installation, hardscape, erosion control, retaining walls, as well as sod and seeding. Also included in the company portfolio are roadside projects, commercial parks, and multi-family residences. This team works on new construction sites (95%) as well as modifying existing landscapes (5%). The current owners oversee daily operations, but many of their duties could be assumed by a new owner or by promoting individuals internally.
Currently located on 2.75 acres, there is plenty of room to store all tools and machinery. There is also room to grow, either by growing plants from plugs or nurturing their growth YOY for project use. The building and the accompanying property are for sale outside the sale of this business. Due to the diverse nature of the services provided by this company, the team of fifteen stay busy throughout the year. With ten landscaping laborers and their three supervisors, supplemental subcontractors are hired as needed to complete large or time-intensive projects.
- Year Established: 1987
- Location and Service Area: Nashville, TN area
- Clients: Commercial clients only, general contractors and property owners (new construction or existing)
- Services: Landscaping including general landscape design, irrigation, hardscaping, erosion control, retaining walls, sod and seeding, roadside work
- Building: 2.75 acres with modular office building, several metal buildings, small barn, parking, storage - Building is for sale outside the sale of the business
- Reason for Selling: Retirement
- Employees: 15: Office (2), supervisors (3), landscaping laborers (10), subcontractors as needed
- Hours: M-F 7:30-5:00
- Seller Training Period: 90 days transition
- Growth Opportunities: Institute maintenance contracts, expand to concrete flatwork, include curbing, expand to site preparation
- Current Owner’s Responsibilities: Oversight
- List Price: $1,700,000
- Gross Sales:
- 2018: $4,595,691
- 2017: $2,740,858
- 2016: $3,214,388
- Cash Flow:
- 2018: $656,917
- 2017: $327,268
- 2016: $472,703
- Assets Included in Purchase*
- Equipment: $$1,238,000: Machinery, equipment, tools, office equipment, several vehicles
- Inventory: Plants, mulch, seed, etc.
- A/R: ~40,000
- Work in Process: $5MM
- Secured Work: $3-4MM
- Intangible Assets: Positive reputation with commercial clients, room for growth with current assets, long-term clients, diversified customer base and services, steady work throughout the year
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$604,023||$30,352||$98,360||$-130,886|
|Compensation to Owner||$0||$71,700||$65,800||$63,600||Owner 2|
|11% Tax on total W2 Salaries||$0||$7,887||$17,598||$16,324|
|Meals & Entertainment||$133||$241||$21||$395|
|Rent||$72,000||$12,000||$0||$0||Non-onward going rent|
|Rent Adjustments||$-24,000||$-24,000||$-24,000||$-24,000||Onward going rent|
|Legal||$0||$119,781||$172,294||$0||Non-onward going - $10k/year average/normal|
|Seller's Cash Flow = Total Addbacks + Net Income||$656,917||$327,268||$472,703||$210,523|
|Profit Margin||14.29 %||11.93 %||14.71 %||5.53 %|
- 14% profit margin in 2018
- Commercial clients only
- General contractors
- Property owners
- Governmental agencies
- New construction
- Existing landscape modifications
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- General landscape design
- Erosion control
- Retaining walls
- Sod and seeding
- Roadside work
Total Employees: 15
- 2 Office
- 3 Supervisors
- 1 Mechanic
- 9 Landscaping laborers
- Subcontractors as needed
- Institute maintenance contracts
- Expand to concrete flatwork
- Include curbing
- Expand to site preparation
The Firm Business Brokerage used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 3-year average cash flow was used with a prescribed multiple is 3.5. With this information, the computation is as follows:
$485,629 x 3.5 = $1,699,703
The fair market value found above positions the business list price at $1,700,000.
Purchase Price: $1,700,000
12.5% Buyer Down Payment: $212,500
12.5% Seller Financing: $212,500
75% Bank Loan: $1,275,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $3,962.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $16,755.
After business expenses and loan payments, a buyer with a 12.5% down payment of $212,500 would retain a profit of $408,313, which results in a 192% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $1,700,000 with the terms listed above, the coverage ratio is 2.64.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
3-Year Average Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
3-Year Average Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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