The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

For a landscaping company how would you value a company with a large A/R. I realize a thorough investigation

No User Photo

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., "www.mywebsite.com"

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (1)
No User Photo
The BAF Group LLC
MD

I would not price differently because of the A/R, because A/R is frequently paid on a dollar-for-dollar basis, anyway; however, the structure of the deal may make a difference. Goodwill is goodwill, and that is the bulk of the price, with a Landscaping Company sale. If the Seller is keeping the Receivables, there is probably no issue. But if the Buyer is getting the A/R are part of the transaction, then escrow for a portion of the A/R might be called for. But even that will depend on the Company's history of noncollectable amounts and the nature of the Customers. By that I mean, what is the chance that the Customers are going to refuse to pay, because of the change in owners? ("I don't owe that money - I owed it to the guy who used to own the Company...!) If the Landscaping Company is dealing with a lot of HOAs and other Commercial Accounts that are under long term agreements, the contracts may alleviate some of the difficulty. Then, the problem becomes whether the contracts are transferable. Lots of variables, before you can mount a clear strategic plan.

Jan 23, 2014

Start a Discussion