Buying A Business The Way To Go?

[skimmy]

I've been looking at getting into the landscaping industry for quite some time as a business owner. I know a couple other owners of landscaping companies that make pretty reasonable money. They all started their businesses from scratch and obviously took a few years to get to where they are now. When I see landscaping companies for sale the asking price tends to be somewhere about 2x - 2.5x their yearly earnings. Given that the business could be paid off within 3 years of the purchase, doesn't this seem like a much easier route to take rather than build it from scratch over a much longer period of time? Or am I missing something? Thanks for any advice you can give me.

[rogercbryan]

You have to equate equipment, name recognition, ongoing contracts, staff, and business credit. These are elements that are valuable in a deal like this.

If you can buy a company that has current ongoing contracts that will help you get started with a high cash flow then you would buy a preexisting company.

If you can find a distressed company where you could buy there assets (trucks, mowers, etc) at a discounted rate from their current value then you would buy the preexisting company.

If you can fins a company that has a skilled staff that is being underutilized you would buy the company.

Look for value sets that you could not create on your own.

[skimmy]

Primarily I would be going for the established customer base. Obviously I would have to look into it for the specific company to validate, however some claim to have over 80% retention rates on a year to year basis with their clients. This is what intrigues me the most. I do not believe that the equipment would be worth a great deal as the trucks and larger machines are usually leased. With a relatively large landscaping company with profits of ~$200k/year would you expect a significant drop due to an owner change?