What is a snow removal company worth?

An owner asking what a snow removal company is worth is really asking what a buyer is paying for. In this sub-sector the points to prepare include the contract book as well as the trucks: who the clients are, how they are billed, how long they have stayed, and whether the records prove the work was done. This guide sets out the points a buyer can ask about. It gives no figures and it is not a valuation, which is a professional judgment on your actual financial statements. Use it as a checklist of what to prepare.

The contract book

Billing structure is the first thing to separate. Under a seasonal flat-rate contract the client pays the same fee however much snow falls. Under per-push billing, revenue follows the weather, so a light winter reaches the income statement directly. Ask your accountant to split each winter’s revenue by billing type and by client. Then look at term length and renewal history, and read each contract for whether it can be assigned or needs the client’s consent. BDC’s business purchase page names goodwill and a client list among the things its extra financing can cover, so the book itself is something a lender can be asked to fund.

Service records

Time-stamped plowing and salting logs, whether from GPS or from dispatch sheets, show that service happened when the contract said it should. If a claim arrives, the logs are the company’s own record of what it did. Ask a valuation professional whether a company that can produce a season of logs on request would be treated differently from one that cannot. Before going to market, ask your insurance broker what documentation the insurer expects, and gather it for recent winters so that thin records are fixed before a buyer sees them.

Claims history and fleet age

Gather the insurer’s summary of past claims and the status of any open one, and ask your lawyer how an open claim would be treated in a sale. The fleet works the same way. Plows, spreaders and, for larger sites, loaders each have a remaining life. Ask your accountant how several units coming due for replacement in the same year should be shown to a buyer. Ask for a condition and age list by unit, with service dates.

Recasting earnings across weather swings

BDC says an accountant helps prepare year-end and interim financial statements, projections and the other documents buyers typically ask to see in due diligence. For a weather-exposed business, show several winters side by side with the snowfall noted, so a mild or heavy year reads as weather and not as a change in the business. Ask your accountant whether owner pay and personal expenses run through the books and how they should be shown. The CRA’s keeping-records page describes where to keep records, for how long, and how to request permission to destroy them early. Our seasonality entry explains the concept.

Who the buyer might be

Ask your adviser who the likely buyers are for a company like yours and what each would be paying for. Consider how your sites would fit the routes and crews of a buyer that already runs a landscaping or grounds company, and whether your supervisors could run the winter without you for a buyer that does not. Knowing which reader you are writing the numbers for is a question for your adviser.

How much depends on you

BDC notes that buyers may insist on a reduced price if you cut all ties. Ask yourself how much of the book would stay after a handover if you personally hold the client relationships. Write down who deals with each client today, how long each supervisor has been with you, and which relationships could be moved before a sale. The answers show how much of the book depends on you.

Where similar companies can differ

Two companies with the same revenue can differ on every point above: one has multi-year flat-rate contracts, documented service and a young fleet, the other has per-push work, handwritten logs and an open claim. Whether and how those differences change a price is for a valuation professional to say. Our answer on how to assess a seasonal business covers the buyer’s side of the same question.

• Revenue by winter, split between seasonal flat-rate and per-push billing
• Contract list with client, term, renewal history and assignment terms
• Service logs for recent winters and the system that produces them
• Insurer’s claims summary and the status of every open claim
• Fleet list by unit with age, condition and service history