How to valuate a nursery

eforgaardJuly 18, 2005

Hello,

I'm interested in purchasing an existing nursery and getting into the business. I need to determine the best way to valuate the business. Sales history? The acreage? Past profits based on tax statements?

Any thoughts would be appreciated.

Thanks!

E

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Rebecca_WA(Wa State)

Have the current owner submitt the last 3 years of financial statements...
balance sheets
profit/loss statements

Take this information to:
your accountant
your banker
both of them will be able to tell you whether to buy or run

    Bookmark   July 18, 2005 at 2:46PM
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calliope(6)

How much experience do you have?

    Bookmark   July 18, 2005 at 8:11PM
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gardengal48

In my previous life in the corporate world, valuating small businesses was something I used to do. Starting off with the three years of complete financial info is a beginning. You also want to take into consideration the cash flow (tax returns needed for this) and the value of the permanent assets - land, permanent structures, infrasystems, etc. And there are often intangibles involved - goodwill, name recognition, vendor relationships and customer lists, etc.

The larger the operation, the more complex this becomes. If this is a significant investment (bigger than a mom and pop operation), consulting a professional may be in order. Many banks now have departments that specialize in the financial needs of small businesses and they usually have someone trained in this methodology that can help. And it never hurts to have a good rapport with a small business banker - you never know when you may need that line of credit to help you over the rough spots in cash flow.

    Bookmark   July 19, 2005 at 10:58AM
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eforgaard

Thank you gardengal48, et al. I appreciate you taking the time. Time for me to bring in a professional!
- E

    Bookmark   July 19, 2005 at 12:54PM
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debinca1(zone 7 CA)

Where in Ca is the nursery?

One other suggestion. If you are already in the industry you may want to ask this Nurseries largest vendors their thoughts. Sales reps are a wealth of information and althought I wouldnt take the word of one rep as final, if you are able to talk to a couple of them and you see a trend, I would deffinatly
listen.

Good luck. The nursery buis can be great fun.

    Bookmark   July 21, 2005 at 1:37AM
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