Many service-based businesses run for years on trust and handshake deals. That approach can work fine day to day, but it creates real problems when it’s time to sell. The following fictional case study compares two similar Florida landscaping companies, one with written service agreements and one that relies entirely on verbal arrangements, to show how contract documentation alone affected buyer confidence and price.
The companies below are fictional, but the pattern reflects what brokers regularly encounter, a topic covered in more depth in our article on whether service contracts matter when selling a business.
Evergreen Grounds Management documented every commercial relationship with a signed service agreement outlining scope, pricing, and renewal terms. When it came time to sell, buyers could review exactly what revenue was contractually secured going forward.
Palmetto Lawn & Landscape had built strong relationships over many years, but almost none of them were on paper. The owner knew his customers well and trusted the relationships to continue, but buyers had no way to verify that assumption.
| Factor | Company A (Written) | Company B (Verbal) |
|---|---|---|
| Buyers Who Made Offers | 5 | 2 |
| Due Diligence Length | 6 weeks | 13 weeks |
| Revenue Considered “Secured” | 85% of customers | Unverifiable |
| Valuation Multiple | 3.0x SDE | 2.2x SDE |
| Final Sale Price | $1,290,000 | $924,000 |
One buyer evaluating Palmetto Lawn & Landscape summarized the concern well: “We have no way to know if these customers will stay once ownership changes. There’s nothing binding them to the business.” That uncertainty translated directly into a lower offer and a longer, more cautious due diligence process.
A written service agreement does more than formalize a relationship, it gives a buyer something they can verify and, in many cases, something that legally transfers with the sale. Verbal agreements, no matter how longstanding, disappear the moment a customer decides not to honor them with a new owner. This is one of the most overlooked factors in preparing a business for sale.
If your business depends on repeat commercial customers, converting even a portion of those relationships to written, renewable agreements can meaningfully increase your company’s value. This doesn’t need to happen overnight, but starting the process two to three years before a planned sale gives you time to formalize your most important accounts. You can review examples of how documentation played a role in other recently sold Florida businesses we’ve represented.
Both fictional landscaping companies had similar revenue, customer counts, and profit. Yet the business with written agreements sold for nearly $370,000 more and closed in less than half the time. If you would like help evaluating your own contracts before going to market, contact Truforte Business Group today.
For more real-world (fictional) examples of how deal factors affect outcomes, see: Case Study: The Business That Documented Every Process, Case Study: Growing Revenue vs. Growing Profit, Case Study: How Owner Dependence Reduced the Sale Price.