Tree Service Company with Municipal Contracts
This acquisition strategy centers on a specialized tree service company that provides trimming, removal, stump grinding, right-of-way clearance, and storm response services for a blend of municipal, commercial, and residential clients. Located in a rapidly expanding southeastern U.S. metro, the company has established itself as a go-to contractor for utility line clearance, public works departments, and large HOAs. It operates a fleet of boom trucks, chippers, and stump grinders and maintains year-round demand through contract-based work and on-call emergency response.
With $4.6 million in annual revenue and $924,000 in adjusted EBITDA, the company is structured for route-based recurring services (mostly quarterly or semiannual) and project-based high-ticket jobs, including emergency cleanup for storm damage. Approximately 60% of revenue comes from municipal and government contracts, with another 25% from commercial accounts and 15% from direct-to-consumer residential work.
This business is highly conducive to SBA 7(a) acquisition financing due to its government contract base, asset-backed operations, low customer concentration risk, and strong cash flow. Post-acquisition strategies include adding residential marketing, acquiring adjacent operators, and expanding into arborist-certified consulting and permit procurement.
Proposed SBA 7(a) Deal Structure
Given the fleet assets, public contracts, and steady EBITDA, this deal supports an SBA loan with strategic seller participation:
Purchase Price: $3.7 million (4.0x EBITDA)
SBA Loan: $2.775 million (75%)
Buyer Equity Injection: $370,000 (10%)
Seller Financing (Subordinated): $555,000 (15%) amortized over 6 years, 12-month interest-only
Safeguards and incentives:
20% clawback on seller note if more than 10% of public clients cancel or rebid within 180 days
Bonus payable to seller if new emergency response contracts are secured within 12 months
Seller remains available for 9 months to assist with safety compliance, bidding, and regulatory licensing transfer
Customer Segmentation and Revenue Model
Client profile:
Municipal contracts (tree trimming, roadside clearance): 40%
Utilities and line clearance contracts: 20%
Commercial (HOAs, retail, multi-site management groups): 25%
Residential one-time or repeat customers: 15%
Service categories:
Routine tree trimming and pruning
Tree removal and stump grinding
Utility line vegetation clearance
24/7 storm/emergency cleanup
Lot clearing and arborist consulting
Contract length varies by client:
Municipal: 1–3 years with defined scope and renewal clause
Commercial: 12-month MSA with pricing tiers by size and volume
Residential: on-demand but recurring for higher-income zip codes
No client exceeds 8% of revenue; top 25 clients represent ~62%. Storm events (ice, hurricane, wind) generate up to 20% revenue spikes seasonally.
Fleet, Equipment, and Operations
Fleet assets (all owned, FMV ~$950K):
4 bucket trucks (75-ft and 55-ft)
3 dump trucks
3 chippers
2 stump grinders
3 pickup trucks
1 skid steer
All vehicles are DOT-compliant and tracked with GPS and job-costing software.
Equipment maintenance is performed in-house by a certified mechanic. Buyer can opt to lease newer trucks to preserve cash and increase fleet reliability.
Personnel:
3 certified arborists
4 climbers
6 ground crew
1 full-time estimator/bid coordinator
2 administrative support (AP, invoicing, vendor contracts)
1 general manager
All staff are OSHA 1910.266 trained and compliant with ANSI Z133 safety standards. Post-close incentives include:
Climber performance bonuses
Safety milestone rewards (incident-free quarters)
Certification reimbursement for additional arborists
Sales and Marketing
Current business development is light due to steady inbound work from contract renewals and RFPs.
Existing marketing includes:
Branded fleet visibility
SEO-optimized website with contact form
Referral partnerships with landscape architects and general contractors
Storm-response hotline promoted seasonally
Marketing spend is only ~$2,500/month.
Growth initiatives:
Add dedicated commercial/residential estimator with performance comp
Pursue DOT subcontractor status for emergency debris removal
Build door-hanger and postcard campaigns for 5 key residential zip codes
Launch YouTube content (before/after jobs, safety tips) to showcase expertise
Financial Summary
Revenue: $4.6M
COGS (labor, fuel, repairs, subcontractors): $2.62M
Gross Profit: $1.98M
SG&A: $1.056M
Adjusted EBITDA: $924K (20.1%)
Gross margins:
Routine contracts: 55–60%
Emergency/storm response: 65%+
Residential: 45–50%
Cash flow is strong and consistent, with occasional spikes in revenue following regional weather events. Most contracts have net-30 or net-45 payment terms; state and city clients pay reliably but slowly.
AR balance is well-managed, with typical days receivable under 35. No bad debt or disputes in the last 24 months.
Legal and Risk Considerations
Fully insured: $2M GL, $1M auto, $1M umbrella, $1M workers comp
Arborists and climbers are licensed per state requirement
No OSHA violations or litigation in past 10 years
Subcontractor agreements in place with storm crews (standby status)
Buyers must ensure license transfer, or apply for temporary qualifier status via seller’s support. Review each municipal agreement for assignability and renewal timeline.
Working Capital and CapEx
Payroll float: $130K–$150K
Equipment refresh or lease: $150K (optional)
CRM and scheduling software: $8K–$10K
Estimator/BD hire: $60K annual salary
Seller consulting: $35K–$50K
Ideal Buyer Profiles
Blue-collar roll-up platforms in landscaping, HVAC, or waste hauling
Arborists seeking to scale into municipal/commercial work
Contractors wanting to capitalize on public RFPs and storm recovery
Entrepreneurs with operational logistics and safety oversight skills
Post-Close Execution Plan
Meet with top 10 public clients and assign dedicated account manager
Launch residential marketing campaign targeting high-margin service areas
Introduce incentive program for climbers and ground crew tied to job completion and upsells
Pursue licensing in two neighboring counties for expansion
Evaluate acquisition of smaller tree service operators with fleet and client base
Conclusion
This tree service business offers durable contract revenue, essential storm response work, and a fleet of income-producing equipment. The skilled labor, safety culture, and municipal relationships make it ideal for SBA 7(a) financing with minimal customer risk. Buyers can scale through route densification, service add-ons, and strategic government bidding while preserving strong cash flow and low capex exposure. For those seeking operational leverage and recession-resistant revenue, this is a prime acquisition target.
