Landmines/Diligence Priorities for Landscaping Design/Build Companies?
June 04, 2024
by a searcher
in Washington, DC, USA
1Like
7Replies
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by a searcher
from University of Maryland
in 4040 Civic Center Dr, San Rafael, CA 94903, USA
These would be top priorities for my commercial landscaping company when doing acquisition:
1) Direct Contribution margins (direct labor, direct COGS, sub-contractors) = want to see 50%+ 2) Any job costing data available? If not (alot of small companies, not) then want to see bid sheets and labor pricing in those estimates to see what quoted at, revenue per budgeted hour quoted and does this meet our minimums 3) Fleet breakdown (make, model, year, mileage % breakdown), older fleet means deferring capex and not investing appropriately in the business 4) Labor practices (especially in California), including ALL PAGA related diligence (time and attendance, wage and hour, meal break and rest break policies) 5) Facilities / real estate costs....big component of overhead that is fixed and can swing P&Ls
Then of course all the usual (any customer concentration, management team / support team in-place etc..)
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by a lender
from Eastern Illinois University
in 900 E Diehl Rd, Naperville, IL 60563, USA
^redacted thank you for the tag. From a lending perspective I would want to understand the following:
1) What are the CAPEX needs historically and what will they look like going forward. We often see brokers add-back 100% of depreciation and not make an adjustment for future CAPEX needs. These businesses often have on-going CAPEX needs.
2) What percentage is residential versus commercial.
3) How much of the work is recurring annual revenue and contracts and how much of it is project based / new construction. The higher the percentage of the work that is project based versus on-going maintenance, the higher the risk if the market tightens and consumers stop spending.
4) Are there any customer concentrations. Examples would be large builders or subdivisions they do a lot of work for.
from University of Maryland in 4040 Civic Center Dr, San Rafael, CA 94903, USA
1) Direct Contribution margins (direct labor, direct COGS, sub-contractors) = want to see 50%+
2) Any job costing data available? If not (alot of small companies, not) then want to see bid sheets and labor pricing in those estimates to see what quoted at, revenue per budgeted hour quoted and does this meet our minimums
3) Fleet breakdown (make, model, year, mileage % breakdown), older fleet means deferring capex and not investing appropriately in the business
4) Labor practices (especially in California), including ALL PAGA related diligence (time and attendance, wage and hour, meal break and rest break policies)
5) Facilities / real estate costs....big component of overhead that is fixed and can swing P&Ls
Then of course all the usual (any customer concentration, management team / support team in-place etc..)
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
1) What are the CAPEX needs historically and what will they look like going forward. We often see brokers add-back 100% of depreciation and not make an adjustment for future CAPEX needs. These businesses often have on-going CAPEX needs.
2) What percentage is residential versus commercial.
3) How much of the work is recurring annual revenue and contracts and how much of it is project based / new construction. The higher the percentage of the work that is project based versus on-going maintenance, the higher the risk if the market tightens and consumers stop spending.
4) Are there any customer concentrations. Examples would be large builders or subdivisions they do a lot of work for.
I hope this helps. Good luck.