Sod manufacturing

searcher profile

September 16, 2023

by a searcher from University of Virginia-Darden - Darden School of Business in Charlotte, NC, USA

Has anyone looked at sod manufacturing businesses? I came across a listing that has $350k of SDE and is for sale for roughly 8x, so hard to make the math work with any meaningful amount of debt. Just curious if this type of multiple is common in that subsector.

Thank you!

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I would concur. I typically see businesses of that size trade in the 1.5x to 3.0x maximum. Also, be sure when looking at SDE you take into account a reasonable salary for the buyer / manager. If they have added back the full seller salary and not made an adjustment for what a new buyer / manager needs to earn to run the business, you need to adjust down the SDE as well. In a lot of these smaller SDE deals I see the brokers add everything back and not adjust for a new owner salary. Good luck.
commentor profile
Reply by an intermediary
in Campbell, CA, USA
Without other details, it is hard to nail down a multiple, but in general for an SDE of $350k, I would consider a range of 2.5x to 3.5x with a 3.5x having mint###-###-#### see baseball card ratings) desirable business features like autonomous or semiautonomous, recurring revenue, diverse customer and vendor base, future demand for the technology, non-reliance on a key employee, etc.
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