This content was created by Mike Andes. This content was uploaded by Mike Andes. This is a YouTube video titled "Is Their Asking Price Too High?" created on May 12, 2023, featuring Mike Andes discussing the valuation of a lawn care business for sale, analyzing its profit margin and enterprise value.
This company did $450,000 in annual revenue last year and is for sale for $850,000 at lawncarebusinessforsale.com if we assume they did a 15% profit margin, that would mean that they made $67,500 in profit. If we take their asking price of 850,000, subtract out their assets of $120,000, that leaves us with $730,000. If we divide 730,000 by 67,500, that means we're paying almost 11 times earnings for this business. That's very high for home service businesses. Typically, enterprise value for a home service business is around 2 to 3x profit.
