$2.5M
$638K
2.4x
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HS Listing ID-71358 Asking Price:$1,500,000 Gross Revenue:$2,521,391 2025 Sellers Discretionary Earnings:$638,320 Rent: NA Expenses: After signing NDA Summary & Highlights: Established commercial...
Why we like it
- Earnings Quality: $638K SDE on $2.5M revenue delivers a healthy 25% margin, indicating disciplined operations and likely recurring commercial contracts that command premium pricing versus residential work.
- Durability & Moat: Commercial facility services create sticky customer relationships through multi-year contracts, specialized equipment requirements, and high switching costs for clients who value consistency and reliability.
- Market Tailwinds: Commercial property owners face increasing pressure to maintain professional appearances and comply with municipal landscaping requirements, creating steady demand regardless of economic conditions.
- Operator Advantage: The platform model suggests potential for geographic expansion and operational leverage, with opportunities to add complementary services like snow removal, pressure washing, or facility maintenance to existing client base.
How to improve it
- Contract Analysis: Review all client agreements to identify opportunities for price increases, longer-term commitments, and expansion of services within existing accounts during the next renewal cycle.
- Service Expansion: Cross-sell complementary services like pressure washing, window cleaning, or seasonal decorating to existing commercial clients to increase average contract value by 20-30%.
- Technology Integration: Implement route optimization software and automated scheduling to reduce fuel costs and improve crew utilization, targeting 10-15% reduction in operating expenses.
- Recurring Revenue Audit: Convert any remaining one-time or seasonal clients to annual maintenance contracts with monthly billing to improve cash flow predictability and customer lifetime value.
- Geographic Clustering: Analyze service area density and target new commercial accounts within existing service routes to maximize crew efficiency and reduce travel time between jobs.
Diligence notes
- Contract Portfolio: Review all commercial contracts for remaining terms, renewal rates, and pricing escalation clauses to understand revenue stability and growth potential over the next 2-3 years.
- Equipment Condition: Assess age and condition of trucks, mowers, and specialized equipment to estimate near-term capital requirements and understand if the asking price reflects necessary equipment investments.
- Seasonal Patterns: Analyze monthly revenue distribution to understand cash flow seasonality and verify that the business maintains sufficient working capital or credit facilities during slower winter months.
- Client Concentration: Examine customer diversification to ensure no single commercial client represents more than 15-20% of revenue, and verify contract renewal history with top 10 accounts.