Market Analysis – Landscaping Services in Canada
Competitors and Number of Companies in Canada and Quebec (2023, Ibisworld Inc.)
The average EBITDA multiple of comparable companies is 3.7x.
What is EBITDA?
EBITDA = Earnings Before Interest on long-term and short-term debt, Taxes, and Depreciation.
EBITDA Multiple in the Administrative Services, Waste Management, and Remediation Sector (DealStats)
In the professional services sector in general, the average EBITDA multiple over the past 12 months is 3.4x (Q2 2024).
Competitors and Number of Companies in Canada and Quebec (2023, Ibisworld Inc.)
Market share of the 3 largest players in the Canadian landscaping industry:
Weed Man Lawn Care – 0.6%
ULS Maintenance & Landscaping – 0.5%
Clintar Landscape Management – 0.1%
Number of establishments:
Canada: 24,155 establishments generating $14.8 billion in revenue
Quebec: 4,586 establishments (19%) generating $3.4 billion in revenue
3,018 in Montreal
601 in Quebec City
967 in other regions
% of revenue by service segmentation:
Commercial landscaping: 51%
Residential landscaping: 34%
Other: 13%
Strengths, Weaknesses, and Opportunities (Ibisworld Inc.)
Strengths
Low import rate High profit margins compared to the industry High revenue per employee
Weaknesses
Low barrier to entry High competition Client concentration Revenue concentration by service Significant capital investment required
Opportunities
Increase in the value of non-residential real estate
Key Success Factors in the Industry (Ibisworld Inc.)
Pursue franchising to increase brand recognition
Industry success heavily depends on reputation → focus on on-time delivery and quality work
Ability to pass product cost increases (e.g., fertilizers) to clients
Expand workforce to offer more complex services
Offer seasonally diversified services to become a “one-stop-shop” (e.g. tree trimming, lawn mowing, planting/removal of trees and shrubs, pest control, snow removal, insect extermination, etc.)
Operate in densely populated cities
Win public sector contracts through competitive bidding
Effectively manage employees for productivity
Have staff capable of multi-seasonal work
Employ landscape architects to speed up project timelines
Offer competitive products and services
Key Financial Figures (Ibisworld Inc. & DealStats)
Average current ratio: 1.7 (2022)
Average accounts receivable collection period: 37 days (2022)
Expense breakdown (% of revenue in 2023):
Wages: 25%
Purchases: 44%
Rent: 3.5%
Profit: 9.1% (Ibisworld)
Average EBITDA margin: 22.5% (DealStats)
Factors Likely to Influence Industry Growth by 2028 (Ibisworld Inc.)
This industry is highly dependent on household discretionary income, as landscaping is considered non-essential. As household income increases, so does the likelihood of outsourcing landscaping tasks.
Growth is expected to be slow between 2023 and 2028.
High interest rates favor renovations over the purchase of new properties.
Non-residential construction value (e.g., office towers, hospitals, factories, industrial buildings) is expected to slightly increase, supporting the industry.
Residential construction value is also expected to slightly increase, benefitting the industry.
Homeownership rates are expected to remain stable, thus having no impact on the industry.
Government investment in new infrastructure is expected to remain stable, with no impact on the industry.
Fertilizer costs are expected to remain highly volatile. In the short term, this may impact profits, but long-term, these costs are passed on to consumers, reducing the effect on profitability.
Key Questions to Ask During an Acquisition (Ibisworld Inc.)
What type of services does the company offer?
Are the services niche or generalist?
Is the business dependent on public sector contracts?
Does the company have recurring clients?
Does the company employ full-time or part-time staff?
Does the company use a client management mobile app?
Does the company use automation to reduce costs?
Does the business require certifications or special permits?
How does the company manage operations based on weather changes?
How often does the company purchase new equipment?
What is the revenue split between residential and commercial services?
Sources
IBISWORLD
“Landscaping Services in Canada” – NAICS (56173 CA)
“Landscaping Services in Canada” – NAICS (56173 QC)
BVR
DealStats – NAICS (44619) – Revenue between $1,000,000 and $5,000,000
DealStats Value Index Q2 2024
Important Note
Please note that this information serves only as a rule of thumb. There are many positive and negative factors that can influence the above results. Every business is unique. Additionally, the sale price depends largely on the number of interested buyers, their potential synergies with the target company, and the return they seek.
Disclaimer
pntt makes no representation to any party regarding the completeness or accuracy of the data or information contained in this document. pntt accepts no liability and disclaims all responsibility for any loss or damage suffered or incurred by any person as a result of using the information contained in this document.
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