This $9M Landscaping Business Looks Great… But Is It Really?
Feb 28, 2025
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The discussion centers on a North Carolina landscaping business listed at $9 million, revealing its strong EBITDA and growth potential. However, hidden risks like labor issues, customer contracts, and equipment valuation raise eyebrows. The hosts explore why the seller is exiting and the impact of immigration policies on labor. They also emphasize the need for thorough financial reviews, cautioning potential buyers about transparency in these deals. It's an insightful look into the complexities of business acquisitions in the landscaping industry.
27:50
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Quick takeaways
The landscaping business shows strong financials with $1.8M EBITDA and growth potential, but hidden risks necessitate thorough due diligence.
Labor reliance on H-2B visa workers raises concerns about stability, making it crucial for buyers to understand associated risks before acquisition.
Deep dives
Evaluating the Landscaping Business Opportunity
The analysis focuses on a landscaping company in North Carolina that generates significant annual cash flow, boasting $1.8 million in EBITDA on total revenue projections of $8.2 million for 2024. The company has been operational since 2011 and is uniquely positioned with a wide range of services, which reduces dependence on any single revenue source. Additionally, the seller's willingness to train a new buyer adds value, creating a smooth transition. This presents a compelling opportunity for potential buyers, especially those looking to expand their existing landscaping operations.
Considerations Regarding Equipment and Labor
The podcast highlights critical factors regarding the included equipment, valued at $2.3 million, which is essential for the landscaping business's operations. It raises questions about whether this valuation reflects the depreciated or original price and emphasizes the need for a thorough inspection of the equipment's condition before purchase. Labor dynamics are also discussed, particularly the reliance on seasonal H-2B visa workers, which introduces potential risks due to changing immigration policies. Establishing the actual cash flow after accounting for maintenance costs and potential increases in labor expenses is crucial for accurately assessing this business's viability.
Diligence and Risk Management in Acquisition
The conversation underscores the importance of extensive due diligence when acquiring a landscaping business, given the industry's noted tendency for misrepresentation. It advises prospective buyers to assemble an independent deal team to ensure accuracy in financial representations, suggesting methods like proof of cash and verifying relevant contracts. The necessity of a seller note and escrow holdback is also emphasized as they provide security for the buyer in potential post-sale discrepancies. Overall, a conservative approach is recommended to gauge true EBITDA and to avoid over-leveraging based on inflated figures.
In this episode, the hosts break down a North Carolina-based landscaping business listed for $9 million, generating $1.8M in EBITDA on $8.2M in revenue. Sounds great, right? Not so fast. They dive into hidden risks like customer contracts, labor concerns, and equipment valuation to determine if this is truly a great deal—or a potential headache.
With 52 employees, $2.3M in equipment, and major growth potential, there’s a lot to love… but also some red flags. They discuss why the seller is moving on, the impact of H2B visa labor risks, and the real cash flow number buyers should consider before making a bid. If you’re eyeing a blue-collar business acquisition, this episode is packed with insights!
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