Tree Service Business for Sale: How to Spot the Best Deal

Buying a business can be challenging, especially when similar businesses are often quite
different in how they operate and generate revenue. At Joshua Tree Experts, some of our
franchise owners pursued the path of trying to buy a business in this industry before deciding to launch their own business as a franchise owner instead.

Let’s explore both options – evaluating a tree services business for sale, and becoming a
franchise owner instead.

How a Business is Usually Sold 

When you’re looking to purchase a business, it can be helpful to understand how the business is being sold. There are three ways a tree services business could be sold:

• Market-based valuations

• Asset-based valuation

• Income-based valuation

Here’s a brief overview of each type of business valuation.

Market-Based Business Valuation

A tree services business for sale through a market-based valuation compares the business to similar businesses that have recently sold. To do this, the seller finds businesses with similar financials and in the same industry and market. The hard part of this valuation is finding businesses that are comparable.

If the seller does find comparables and has access to the financials, they’ll be able to see what kind of multiplier was used to set the price of the business. For example, if a business earns $100,000 a year and sells for $300,000, the multiplier is three. In 2023, the average business sold for 2.5 times its annual revenue.

Asset-Based Business Valuation

If a tree services business for sale is using an asset-based valuation, the owner has priced the business on the value of its assets (i.e., real estate, high-value equipment, inventory, etc.). This often happens with businesses that have assets but don’t generate a solid profit.

Keep in mind that this type of sale means you may not get a customer list or any records of the business. You’re starting a business from scratch with previously owned equipment.

Income-Based Business Valuation 

Finally, an income-based valuation is created on the projected future earnings of the business. Two things are considered in making this valuation: the rate of return on the capital assets and a company's projected cash flow.

The cash flow and capital assets will be part of the financial statements, and there are three kinds of financial statements to consider.

Obtaining Financial Statements

The types of accountant-prepared financial statements vary based on the level of analysis done for the business.

• Notice to Reader Financial Statement. The business owner provides information to the accountant to create a standardized financial statement. The information is based entirely on what the owner submits.

• Reviewed Financial Statement. The business owner provides information to the accountant and the accountant reviews the numbers before generating a financial statement.

• Audited Financial Statement. The business owner provides information to the accountant who performs a detailed process, going through every number, to prepare the financial statement.

Buy a Joshua Tree Experts Franchise 

Another option is to purchase a tree service franchise, such as Joshua Tree Experts.

Buying a franchise gives you a proven business model in the territory where you choose to
operate. While you’re not buying someone else’s customer base, you are also not buying any challenging issues that come with an existing business.

Some other benefits of buying a Joshua Tree Experts franchise include:

• Starting fresh: You have a business model that’s new in franchising but experienced in the tree services industry, with a strong team that will support you.

• Marketing and administrative support: When you purchase a franchise, you receive marketing strategies to promote your business and the administrative processes to run an efficient business.

• Network strength: Joshua Tree Experts has secured the vendors you need and has established affiliations with industry groups that you can leverage to your benefit. You also join a network of other franchise owners in the same business as you.

You may find that investing in a franchise is a more stable way to launch your own business in the tree services industry.

Reach Out to Joshua Tree Service 

Submit our franchise inquiry form as a first step to getting introduced to Joshua Tree Experts and to learn more about buying a tree services business.