Business for Sale, Would I Buy It? | Florida Tree Service

In this edition of “Would I Buy This”, we have a large Florida tree service company. What do they mean by large? Let’s look at the numbers. So gross revenue is 2,367,369 million, and cash flow is 1,237,293 million. Wow okay, that’s one of the things I’ve noticed about tree service businesses. For whatever reason, we’ve done some due diligence projects for tree service businesses, and in the process of doing that we always look to see comparable sales of other businesses. For whatever reason tree service businesses seem to have super high profit margins. I don’t know if it’s because the equipment to get into it is pretty expensive. You need the big bucket trucks and the grinders and you need people who are skilled enough to do it without killing themselves. There’s a reasonable barrier to entry to starting a tree service business and as a result or maybe there’s a different reason, I’m not sure.

They generally seem to do really well profit-wise. So this one is a little over 50% profit margin, which is fantastic. For most businesses, if you get to 20% you’re happy, 25% you’re really happy, anything over 25% you’re killing it, and you’re doing great as a business. Over 50% I mean that’s about as good as it gets for, especially for business with real employees and real equipment, we’re not talking about a virtual business. The asking price reflects the fact that this is a super profitable business. They’re asking $10 million, I would put the price more like six million, a little over four times. They’re saying the furniture fixtures and equipment are valued at $3 million. That seems like a lot to me for a business that’s doing only 2.3 million. Maybe that’s right though, but that still implies that you could get everything this business needs to run with for three million bucks. You’re still paying more than four times that on top of the equipment value they’re getting. I think 10 million is probably just too high but it’s a free country they can ask whatever they want. Maybe they’ll get more than six, anything over 6 I think would be a win for them. Six I would call a fair price.

Let’s see if there’s anything in here. It says over 3 million specialized tree equipment. Well, specialized tree equipment is just bucket trucks and wood grinders. But they are in Florida and pointing out hurricane and disaster cleanup and oversized trees. They have a lot of work. Well, that makes sense Florida is getting ravaged by hurricanes all the time that are always blowing down trees. So even if you’re not necessarily looking to fix the trees in your yard or do maintenance, there’s still potentially, going to be a lot of work. And not just homeowners but businesses, strip malls, cities, and counties. They all may need that service as well and could contract it out. So I think Florida would be a good place for this kind of business. This is certainly a high-profit business. If the price was more in line I would be much more excited about it. But maybe it has to sit on the market for a while for the price to come down. Or maybe somebody’s going to go in and snap it up and figure they can make it out make it work later or grow the business enough to justify the price. But in general, if I was looking to start a business or buy a business today I would definitely look at tree service businesses. For whatever reason they seem to be super profitable and I’m a big fan of super-profitable. So for that reason alone, I would be interested in tree service businesses. For this one, I would just wanna see the price more in line with what you’re getting for it.

Here’s a little about this series. CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses for sale and see if Matt would be interested in buying them.