Taking over a gardening business: how to evaluate contracts?
Introduction
Maintenance contracts represent the main asset of a gardening business. Unlike one-off services, they generate predictable revenue and build customer loyalty. But not all contracts are equal.
Before taking over a gardening business, you must analyse in depth the nature, duration and profitability of these commitments. A well-structured contract portfolio guarantees a solid foundation to start with. Conversely, poorly negotiated or fragile contracts can compromise your profitability from the very first months.
This guide helps you evaluate maintenance contracts with a practical and structured approach. You will learn to identify essential clauses, calculate the real profitability of each contract, and spot termination risks. You will also discover how to analyse contracts with local authorities and businesses, which have important specificities.
The objective: to give you the tools to make an informed decision and secure your takeover of a business in the gardening and outdoor maintenance sector.
📌 Summary (TL;DR)
Recurring maintenance contracts constitute the heart of a gardening business's value. Before taking over, analyse the composition of the customer portfolio, check contractual clauses (duration, termination, indexation), and calculate the real profitability of each contract. Identify termination risks and carefully examine contracts with local authorities and businesses. Rigorous due diligence of contractual documentation allows you to secure your takeover and anticipate operational challenges.
📚 Table of contents
Recurring maintenance contracts: the heart of value
Recurring contracts constitute the main asset of a gardening business. They generate predictable and regular revenue, unlike one-off services.
Distinguish three types of contracts: annual (complete maintenance over 12 months), seasonal (generally March to October) and one-off (single pruning, landscaping). Annual contracts offer the best financial stability.
Analyse these key indicators: recurrence rate (percentage of customers who renew), average duration of customer relationships, and monthly billing volume. A good portfolio shows a recurrence rate above 80%.
Seasonality strongly impacts cash flow. Check how the business manages quiet months (December-February). Recurring maintenance contracts follow similar logic in other sectors.
Analysing the composition of the customer portfolio
The type of customers determines the stability of the business. Assess the distribution between private individuals (villas, private gardens), professionals (property management companies, co-ownerships) and the public sector (local authorities, public green spaces).
Concentration risk is critical. A customer representing more than 20-30% of turnover weakens the business. Its loss would have a major impact on profitability.
Examine the geographical distribution. Too wide an intervention radius increases travel costs and reduces profitability. Favour concentrated areas.
Analyse the longevity of relationships: loyal customers for 5-10 years indicate solid service quality. Compare with evaluation practices for a customer portfolio in the construction sector.
Checking essential contractual clauses
Systematically examine these clauses in each contract:
- Duration: fixed-term or indefinite contract
- Tacit renewal: automatic renewal or not
- Termination notice: 1, 3 or 6 months depending on the case
- Price indexation: annual adjustment clause (CPI)
- Frequency of services: weekly, fortnightly, monthly
Transferability is essential during a takeover. Some contracts include change of control clauses that require the customer's agreement.
Check payment terms: on receipt, 30 days, 60 days. Long delays impact cash flow. Identify approval clauses that could block the transfer.
Assessing the real profitability of contracts
Calculate the margin per contract by integrating all costs: travel time, labour (including social charges), equipment (depreciation), and consumables (fuel, products).
Some contracts may be loss-making, maintained out of habit or personal relationship. Identify them quickly: they weigh on overall profitability.
Analyse the productive time (billable) / total time ratio. A good ratio exceeds 70%. Travel and preparation time reduces this ratio.
Compare the rates charged with Swiss market standards. In French-speaking Switzerland, garden maintenance is generally charged between 60 and 90 CHF/hour depending on complexity. Rates that are too low signal a positioning problem.
Identifying termination risks
Certain signals announce potential terminations. Be vigilant about recurring payment delays, repeated complaints about quality, or requests for rate renegotiation.
Dependence on the seller's person is a major risk in gardening. If customers maintain a strong personal relationship with the current owner, they may leave after the takeover.
Request the termination history over the last 2-3 years. A rate above 15-20% annually indicates a structural problem (quality, price, service).
Identify renewals due in the 6-12 months following the takeover. These periods are critical to demonstrate your professionalism and retain customers.
Contracts with local authorities and businesses
Public contracts follow specific rules. Local authorities launch tenders for green space maintenance, with detailed specifications and strict criteria.
These contracts often require certifications (Jardin Suisse, ISO), specific insurance (high professional liability), and demonstrated technical capacity (equipment, qualified staff).
The advantage: stability and predictability. Public contracts generally last 3-5 years with guaranteed volumes. The disadvantage: tighter margins (price competition) and sometimes long payment terms (60-90 days).
Contracts with property management companies offer an interesting balance: large volumes, regular payments, but high quality requirements.
Documentation and due diligence
Request these essential documents from the seller:
- Signed copies of all current contracts
- Billing history by customer (last 3 years)
- List of terminations with reasons
- Detailed intervention schedule
- Pricing conditions and rate schedules
Have the legal aspects checked by a specialist lawyer. The Leez expert network can direct you to competent professionals.
Accompany the seller on 3-5 representative interventions. You will observe the quality of customer relationships, the real state of the gardens, and concrete expectations.
Browse the gardening businesses for sale on Leez to compare opportunities and refine your analysis.
Contract analysis constitutes the most decisive step when taking over a gardening business. Recurring maintenance contracts represent the foundation of predictable revenue, but their value depends on their duration, real profitability and transferability. A balanced portfolio between private individuals, co-ownerships and institutional clients offers better stability than excessive concentration on a single segment.
Contractual due diligence is not limited to verifying the existence of contracts. It requires analysing termination clauses, renewal terms, pricing conditions and any intuitu personae clauses. Contracts with local authorities and businesses deserve particular attention due to their volume, but also their administrative requirements and specific renewal cycles.
Are you considering taking over a gardening business? Discover the opportunities available on Leez and access detailed listings with verified information on contracts and the customer portfolio.
