Skip to content

Jobber Academy

How to Sell a Landscape Business and Maximize Your Profits

May 31, 2022 11 min. read
Read More Start Trial

You’ve owned your landscaping or lawn care business for a while now, but you’re ready to leave and try something new. It’s time to sell the business—and get as much money out of it as possible.

To do that, you need to understand what your selling options are and how to find the right buyer. We’ll walk you through the process of selling a landscape business, from valuing the business to negotiating the sale.

How to value a landscaping business

Want to find out how much your landscaping or lawn care business is worth? Get a business appraiser to value your business for you—this will help you manage expectations and ensure you sell for a fair price.

To get a ballpark idea of your landscaping business valuation before talking to an appraiser, calculate your multiple of revenue, SDE, or EBITDA.

Some appraisers, buyers, or investment partners prefer certain valuation models, so you may end up using one or more of these formulas.

Multiple of revenue

This is one of the fastest and most common ways to estimate business value. Just multiply your annual revenue by your industry modifier—that is, the percentage your industry is expected to grow next year.

The formula is simple:

Revenue x industry multiplier

SDE (Seller’s discretionary earnings)

Calculating seller’s discretionary earnings (SDE) is an easy way to measure how much your landscaping business is worth to you—or to the person who buys the business.

SDE factors in last year’s earnings before taxes, your annual take-home pay as the owner, any one-time expenses that weren’t essential to staying in business, and your industry modifier.

Here’s how to calculate SDE for businesses under $5M in value:

([Net pre-tax earnings + your salary + expenses] – debts) x industry modifier

EBITDA (Earnings before interest, taxes, depreciation, and amortization)

Tallying up earnings before interest, taxes, depreciation, and amortization (EBITDA) can give you an idea of your business’s cash flow and profitability. This model works best for businesses over $5M in value.

Check your cash flow statements and add up your net income, taxes, and interest expense to get the business’s net profit.

Then add in your depreciation and amortization—that is, the difference in value for tangible and intangible assets:

  • Tangible assets are material objects that belong to your business, like landscaping equipment, facilities, and supplies.
  • Intangible assets are important to your business but don’t have a physical form, like your service branding, your landscaping website, and any patents or trademarks.

Finally, factor in the landscaping industry modifier. Here’s the formula to calculate your business EBITDA:

(Profit + depreciation + amortization expenses) x industry modifier

Factors affecting value

When you’re calculating your business’s value, there are several factors to keep in mind. Each one will affect how much you’re able to sell the business for:

  • Company size and years in business
  • Number of employees and years of experience
  • Client types (residential vs. commercial)
  • Sales revenue and trends
  • Quantifiable reputation (e.g., number of reviews)
  • Marketing presence and investment

You can research sales information for similar-sized landscaping businesses. This will also tell you how much you might be able to sell your business for.

How do you know it’s time to sell your landscaping business?

At the end of the day, you’re the only one who knows the right time to sell your business. There are lots of reasons why you might want to sell, like:

  • You’re ready to retire
  • You want to pursue other opportunities (business or personal)
  • You’re moving to another area but want to keep the business running
  • You need a large amount of money and want to get it from your business
  • The business isn’t performing well and you want to cut your losses

READ MORE: 7 types of grants you can use for your lawn care business

Selling a lawn mowing business: 4 buyer options

Selling a landscape business or lawn care company can take many forms, but you normally have four options to choose from:

1. Sell to an employee or other individual

It’s common for landscaping entrepreneurs to sell their business to another person. This could be a current employee or someone who’s looking to break into the landscaping market.

An individual buyer will most likely purchase every part of your company.Selling your company to an individual only works within a certain price range—roughly $400k–2M. A higher-valued business is less likely to find an individual buyer because they may not be able to afford it.
They know how (or you can train them) to run the business the way you did.
You can choose to keep shares in the business and still be part of things, but at a much lower commitment level.

To find an individual buyer, talk to your team and business contacts. You might find that a fellow entrepreneur wants to get into landscaping, or one of your employees is eager to take the reins.

Pro Tip: Before you’re ready to sell, talk to your lawyer and insurance agent about getting key person insurance for yourself—and make sure it pays out to another important employee. If you die or can’t work anymore, the employee can use the insurance money to buy the business from you or your family.

2. Sell to a competitor

A competing landscaping business might be willing to buy your business. Your client list, processes, and other competitive advantages will help give them a boost in your market.

They already know how to do the work, so you don’t need to worry about training.They may not want to buy assets they already own, like branding or equipment.
They may be able to afford a higher purchase price since the money comes from the business, not their own pockets.They might make changes that affect the legacy you built, such as rebranding or absorbing the business.

To find a competitor buyer, make a list of competing landscaping businesses in your area. Then approach each one individually to see if they’re interested in acquiring your business.

READ MORE: How MIL-SPEC Landscaping went from 0 to 60 lawns a week

3. Sell to a strategic buyer

You can sell your landscaping business to a company that isn’t a competitor but offers related services—for example, a business specializing in weekly lawn or pond maintenance.

They may purchase every part of your company if they don’t already have the right people and equipment in place.They may need to make adjustments within your business to run it the same way as their existing one.
As a business, they may be able to afford a higher purchase price.They might rebrand the business to match their current landscaping company name and branding.
The purchase is great for both your and their existing customers—it gives both groups a complementary service.

To find a strategic buyer, go through your local business directory. Note any businesses whose services pair well with landscaping, then contact them about a possible purchase.

4. Find a private equity group

Private equity groups look for opportunities to invest in a business, increase its value, and sell it for a higher price. When you work with one, it’ll take longer to sell the business, but you can get more money out of it.

A private equity group will help you start phasing out of the business without affecting everyday operations.It can be hard to find a group that specializes in the green industry or home service—and isn’t already partnered with a business in your area.
Some groups will improve your processes and increase your business’s value before the sale.They won’t buy your business outright, so this isn’t an immediate exit plan.
When the business is ready to sell, they’ll track down a buyer for you and manage the sale.You won’t get to keep the full purchase amount since the group will take a percentage as their fee.

To find a private equity group, google “STATE + landscaping private equity”. This will show you which groups are already closing deals on landscaping businesses in your state.

Preparing your landscaping business for sale

You know what your business is worth and you’re ready to sell. Here’s how to keep that value high and make sure your business appeals to potential buyers:

  • Review your books. Gather your financial statements, tax filings and returns, licenses and deeds, and balance sheets for the business. You should also clear up accounts receivable and follow up on any unpaid invoices.
  • Trim your client list. Cut unprofitable clients and focus on more valuable work. This could include residential clients with large yards, or long-term commercial lawn care contracts. It’s important to note that commercial clients are often seen as more reliable sources of income than residential ones.
  • Encourage independence. Start stepping back from the business early. Build a solid management team to run your lawn care business and get them to build their own client relationships. This will prove the business can survive without you.
  • Improve your invoicing. Increase prices to boost your profitability and shorten your payment period to net 30. You can also start using landscaping invoicing software to send invoices and payment reminders automatically.
  • Update and maintain equipment. New assets will fetch a higher price than older ones that need to be repaired or replaced, so deal with any equipment or facility maintenance before looking for a buyer.

Pro Tip: Get your key employees to sign non-compete agreements. This will reassure buyers that your team won’t quit and start their own businesses right after the sale.

READ MORE: Hire long-term employees faster with a great landscaper job description

Marketing your landscaping business for sale

Marketing your business for buyers looks different from marketing landscaping services to customers.

Instead of using door hangers or flyers, you’ll post an ad in local publications for entrepreneurs, or spread the word through business relationships.

You’ll need to promote the operational parts of your business that make you special, like:

  • What your landscaping or lawn care business plan is
  • What types of clients you have and how many
  • Which landscaping services you offer and equipment you own
  • Who your employees are and what their experience is
  • What processes you have in place to keep operations running smoothly
  • What makes you unique in your local market

If you’re working with a broker or private equity firm, they’ll handle this part for you. They know what parts of your business to promote and how to make it appealing to potential buyers.

Pro Tip: Sale prices can change with current service demand. Consider waiting to sell until your busy season, when a buyer is more likely to start turning a profit right away. This might make potential buyers more willing to purchase.

READ MORE: Stay busy year round with winter landscaping services

Negotiating the sale and accepting an offer

Once you receive an offer from an interested buyer, your business broker will handle negotiations for you. If you’re representing yourself, follow these tips for closing the sale:

  • Be confident in stating your selling price—you know what your business is worth.
  • Keep a clear head and leave emotions out of the process.
  • Make sure the buyer feels like a good fit and will respect the business you built.
  • Work with your lawyer to draw up or review the sale contract.
  • Keep your accountant in the loop so they’re prepared for tax season.

Pro Tip: If you offer licensed services like weed control, you may not be able to close the sale or leave the business until the buyer gets their own license to provide those services. Find out ahead of time if licensing might delay the sale.

READ MORE: How to start a weed control business

Whether you’re ready to retire or move on to your next adventure, planning your landscaping business exit strategy will set you up for a smooth transition.

You won’t be able to do this work forever. To leave a legacy, make sure you’re building a business that will outlast you.

Join over 200k service professionals that trust Jobber

Get Started