Mike Andes values a Colorado lawn care business asking $400,000. The owner claims $158,000 cash flow, but after adjusting for owner pay, true passive profit is around $50,000-$60,000. Equipment is worth $100,000. Andes would pay $250,000 at a 3x multiple instead of the current 5x ask.
$400,000
$158,000
$100,000
$50,000–$60,000
About 5x on profit
This lawn care business in Colorado is for sale for $400,000. Now it says that they made $158,000 in cash flow, but that includes any sort of payments going to the owner. So if I actually paid a general manager to run this location, I'd probably actually net out profit maybe 50, $60,000 after I was completely passive from daily operations. That means If I take 400,000 of the asking price, subtract out the equipment, I'm actually paying about a 5x multiple on on the profit for this business. I would more or less like to pay 3x multiple so the equipment $100,000. And if I take a multiple of say, about three, I pay about $250,000 for this business. How much would you pay? Comment below.
