Here is an update on how we see the market for green industry mergers & acquisitions right now.
First, we see a great deal of interest in many markets from both buyers and sellers, particularly in the commercial maintenance sector. Although the largest companies within the industry, which have traditionally played a major role in industry M&A activity, have been largely out of the market for over two years now, the interest level of regional players and emerging businesses is relatively high and increasing.
While private equity involvement in the industry is not high (except for among the largest players), there seems to be an uptick in private equity interest in the industry as a whole, probably originating with the potential sale of The Brickman Group. That interest may accelerate, depending on how successful the Brickman sale is and the level of valuation which is achieved.
Lawn care M&A activity has been light, largely driven by an apparent low level of activity by industry giant Trugreen Lawncare, a unit of The ServiceMaster Company. However, that will not likely last forever. In addition, we recently picked up hints that the second largest lawncare company, Scotts Lawn Service, a unit of The Scotts Miracle-Gro Company, may resume acquisition activity. In addition, while little has happened so far, the market seems right for a new lawncare consolidator to appear on the scene as well.
Acquisition activity related to companies focused on design-build and other segments of landscape construction remains limited, although opportunities should develop as the economy continues to strengthen. However, these transactions are always a challenge and often require both creativity and patience.
Despite the higher level of interest and activity, buyers (and their financial backers) continue to be quite disciplined and, as a result, there has been little movement in valuations. We do not really see signs that this situation is likely to change in the near future. In some cases, the reality of valuations has made it difficult for buyers to find willing sellers. Nevertheless, a sellers’ market has not emerged.
We would be happy to discuss your particular situation confidentially. Please give us a call or send us an email. We will also be attending the Green Industry Conference and several other industry events this fall and winter. We would be happy to schedule a time to meet.
As always, if you are interested in buying or selling a green industry business, ready to begin exit planning or considering an acquisition strategy, we would welcome the opportunity to talk.
Ron Edmonds