South Houston Commercial & Residential Landscape Co, 14-Year Texas Builder Contractor

$5.8M

Revenue

$1.0M

SDE

3.2x

Multiple

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Full Editorial Writeup

This is a 14-year-old landscape installation and irrigation company operating in the South Houston market since 2012. Its core business is installing landscaping and irrigation for prominent, big-brand residential builders under exclusive, long-standing contracts. Those contracts grant the company the sole right to perform installs across entire subdivisions and neighborhoods, which is what turns a typically lumpy construction-adjacent trade into something with real predictability. On $5.82M of revenue, the business throws off $1.0M of owner cash flow, a healthy roughly 17% margin for this trade.

The operating footprint is lean and asset-light: a leased 1-acre yard with a 7,000 SF shop and storage, 10 full-time employees, 2 part-time, and 23 contractors. The heavy use of contractors keeps fixed labor costs variable and scales with builder volume, which protects margins when volume dips but also concentrates execution risk in the crews. The exclusive subdivision contracts are the real asset here, not the equipment or the dirt.

The obvious caveat: this is new-residential-construction demand, which is cyclical and rate-sensitive. Revenue is tied to builders breaking ground, so a housing slowdown in Houston hits this business directly. The $3.2M ask at 3.19x cash flow is a reasonable headline multiple for landscaping, but the durability of those builder relationships, and how they behave in a down housing market, is the whole game.

Why we like it

Earnings quality is strong for the trade: $1.0M of cash flow on $5.82M revenue is a ~17% margin, and the exclusive subdivision contracts give unusual revenue predictability versus typical bid-by-bid landscape installers. The contractor-heavy labor model keeps costs variable, which supports margin resilience if volume softens.
The moat is the exclusivity: contracts grant sole install rights across entire subdivisions and neighborhoods tied to big-brand builders. Once a builder standardizes on you for a community, you own that pipeline for its build-out, which is a real switching cost and a hard thing for a new entrant to dislodge.
South Houston is one of the strongest new-home construction markets in the country, with sustained population and builder activity. The listing calls out room to expand north and sign additional builders, so the TAM is nowhere near tapped for a buyer with capital to scale crews.
Operator advantage is clear: an experienced buyer who can manage crews, win additional builder contracts, and systematize the contractor bench could grow this without reinventing the model. The 14-year track record and mature workflows mean you are buying an operating platform, not a startup.

How to improve it

Audit the builder contracts in the first 90 days to confirm they are assignable, written, and multi-year rather than handshake relationships tied to the current owner. Formalizing and extending these agreements is the single biggest lever to de-risk and increase enterprise value at resale.
Add recurring maintenance and irrigation service revenue to the install base. Every subdivision you install is a future book of recurring mowing, irrigation repair, and seasonal service contracts, which smooths out the cyclicality of new-construction installs and raises the exit multiple.
Diversify the builder roster to reduce concentration risk. If two or three builders drive the majority of revenue, intentionally sign additional builders and push north as the listing suggests before a downturn exposes concentration.
Tighten the labor model by converting top-performing contractors to employees or locking in subcontractor rate agreements. With 23 of 35 workers as contractors, crew availability and pricing are a live risk, and securing capacity protects your ability to deliver on exclusive contracts.
Install job-costing and scheduling software to track margin by subdivision and crew. With $5.8M flowing through, even a 2-3 point margin improvement from better bidding and crew utilization is meaningful dollars.
Pursue commercial landscape maintenance contracts alongside the residential builder work. HOAs, property managers, and commercial sites offer recurring, less cyclical revenue that offsets the residential construction exposure baked into the current model.
Build a bench of operational management so the business can run without the seller. Reducing key-person dependence on both the owner and specific crew leads is essential before the next ownership transition or growth push.

Diligence notes

Scrutinize the builder contracts: confirm they are in writing, assignable in a change of control, specify exclusivity terms, and verify how much revenue is concentrated in the top one to three builders. The entire thesis rests on these contracts being durable and transferable.
Stress-test the cyclicality by pulling monthly revenue through the 2022-2023 rate-hike housing slowdown. New-residential installs are rate-sensitive, and you need to see how builder volume and this company's revenue actually behaved when starts slowed.
Reconcile the $1.0M cash flow to tax returns and bank statements, and examine owner add-backs closely. Verify the margin is sustainable and not propped up by underpaying contractors or deferred equipment and vehicle replacement.
Review the contractor relationships and classification risk. With 23 contractors versus 12 employees, confirm worker-classification compliance under IRS and Texas rules, and assess whether crews are loyal to the company or to specific individuals who could leave.
Confirm the yard lease terms, rent, remaining term, and renewal options since the facility is leased. Verify the 1-acre yard and 7,000 SF shop are adequate for current and planned volume and that the landlord will consent to assignment.

Source

Originally listed on BizBuySell. View original listing →