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From the Editor – M&A Activity Up in 2014
In less than two months time, 2014 is shaping up to be one of the biggest years in memory when it comes to green industry mergers and acquisitions.
We are seeing signs of strength in all sectors, especially in the landscape services sector, with owners seeking to position their businesses in the event a consolidation opportunity develops. In addition, there is a greater level of interest in the industry from private equity investors.
While activity is weaker in the lawn care sector, partially because industry leader TruGreen is not currently making acquisitions, a number of lawn acquisitions have been completed in 2014. In addition, Scott’s Lawn Service has signaled a return to acquisitions in a disciplined way.
As always, if you are interested in buying or selling a green industry business, ready to begin exit planning or considering an exit strategy, we would welcome the opportunity to discuss your situation.
 
Ron Edmonds
[email protected]
901-351-1510
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Here is our monthly recap of recent merger & acquisition transactions in the green industry:
The Budd Group, an integrated facilities services company based in North Carolina, has acquired The Grounds Crew in Orlando, Florida.
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St. Croix Tree Service of Wisconsin and Minnesota has merged with SavATree.
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Noon Turf Care of Marlborough, Massachusetts, has acquired Grasshopper Lawns in Connecticut.
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Swingle Tree & Lawn of Colorado has acquired Advanced Tree and Lawn Concepts of Golden, Colorado
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Arrow Environmental of Sarasota, Florida, has acquired Bug Out Service of Jacksonville, Florida.
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Ryan Lawn & Tree of Overland Park, Kansas, has merged with Simply Green Lawn Sprinklers of Riverside, Missouri.
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Davey Tree has acquired Maier Forest & Tree of Rochester, Minnesota, and Superior NW Tree & Shrub Care of Seattle, Washington.
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The ServiceMaster Company has completed its planned spin-off of TruGreen.
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If you know of green industry business sales transactions which should be reported in our list, please contact us.
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Five Things That Can Make a Big Difference in the Value of Your Business
With the Sochi Olympic Games taking place this month, it is interesting to reflect back on some of the big events of the 2010 Olympic Games in Vancouver.
I n the Men’s Downhill race at Whistler, for example, the winning time of 1:54:31 was posted by Didier Défago of Switzerland. The time among medalists was the closest in Olympic history, and while Mario Scheiber of Austria posted a time of 1:54:52 – just two tenths of a second slower than Défago – he finished out of the medals in fourth place.
In ski racing, one fifth of a second can be lost in the tiniest of miscalculations. And when it comes to selling your business, markets can be equally cruel. Get everything right, and you can successfully sell your business for a premium. Misjudge a couple of minor details and a buyer can walk, leaving you with nothing.
Here is a list of five details to get right before you put your business on the market:
1. Find your lease. If you rent space, you may be required to notify your landlord if you intend to sell your company. Read through the fine print and ensure you’re not scrambling at the last minute to seek permission from your landlord to sell.
2. Professionalize your books. Clean up your financial records and consider having a review or audit of your financial statements prepared to give a buyer (and you as the owner) greater confidence in your bookkeeping.
3. Stop using your company as an ATM. Many business owners run trips and other perks through their business, but if you’re planning to sell, these treats will artificially depress your earnings, which will reduce the value of your company in the eyes of a buyer by much more than the value of the perks.
4. Protect your gross margin. Oftentimes, when leading up to being listed for sale, companies grow by chasing low-margin business. You tell yourself you need top-line growth, but when an acquirer sees your growth has come at the expense of your gross margin, she will question your pricing authority and assume your journey to the bottom of the commoditization heap has begun.
5. If you’re lucky enough to have formal contracts with your customers, make sure your customer contracts include a “survivor clause” stipulating that the obligations of the contract “survive” the change of ownership of your company. That way, your customers will be less likely to try to use the sale of your company to wiggle out of their commitments to your business.
Like competing in the Olympics, selling a business can be an all-or-nothing affair. Get it right and you will walk away a winner. Fumble your preparation, and you could end up out of the medals.
Consider getting your Sellability Score. Take 13 minutes to answer the Sellability questionnaire now. You’ll see how you performed on the eight key drivers of sellability and you can identify any gaps you need to fill before taking your business to market. Click here to get your Sellability Score.
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Scotts LawnService Poised for Lawn and Pest Acquisitions
Scotts LawnService (SLS), a unit of The Scott’s Miracle-Gro Company (SMG), appears poised to make acquisitions again in in both the lawn service and pest control sectors.
During SMG’s first quarter investor conference call, management made clear that they had allocated a budget for acquisitions for SLS and that, in addition to lawn service acquisitions, they would be pursuing a pest control acquisition to serve as a platform for SLS to expand its operations in pest control using the Ortho brand.
More information
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An article by Ron Edmonds entitled “Questions to Ask: Keep These Queries in Mind When Considering Your M&A Options” appeaqrs in the February issue of Lawn & Landscape. Click here for the online magazine. Click here for the web version.
For a list of markets with opportunities for business sellers, click here. visit http://principiumgroup.com/opportunities-for-business-sellers/. The primary focus is commercial maintenance, but some design-build may be acceptable. There are also opportunities for lawn care businesses in many markets.
Here’s a link to a last-minute opportunity to attend a live Built to Sell workshop with John Warrillow in Las Vegas at a great price, especially for clients and friends of The Principium Group.
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Our Travel Schedule – We’d Like to Meet With You
We are currently planning to attend the following events:
Green Industry Great Escape, Feb 27-March 1, Anaheim
US Lawns Million Dollar Club Retreat, March 5-6, St. Petersburg, FL
If you are attending any of these events and would like to meet, please contact us and we will schedule a time.
We are available to speak to industry groups on topics relating to green industry ,mergers & acquisitions. Contact us for more information.
Contact us for information about booking Ron Edmonds to speak to your industry group or company meeting.
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The Sellability Score is a quantitative tool designed to analyze how sellable your business is.
After completing an online questionnaire, you will immediately receive a Sellability Score based on a 100 point scale along with instructions for interpreting your results. We will send you the full report along with a guide for interpreting the Sellability Score in the Green Industry.
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The Principium Group provides advisory services related to mergers & acquisitions, exit planning and capital strategies to a variety of middle market and small businesses, with a focus on the green industry. Our professionals have assisted business owners in hundreds of transactions.
For buyers, Principium provides assistance and counsel in strategic planning, identifying potential acquisition targets, due diligence and planning for successful integration of acquisitions.
For sellers, Principium provides assistance and counsel in evaluating strategic alternatives, identifying and negotiating with potential acquirers and assisting with transactions from due diligence through the closing process.
In order to provide the highest quality service, we maintain relationships with other professionals serving the green industry and can access those professionals to supplement our internal resources. No matter how large or small your business may be, we have the resources to serve you well.
We understand that the decision to buy or sell your business is a profound one, and we pledge to work with you in a professional and confidential manner while we help you navigate this often confusing process.
Whether you have immediate plans to buy or sell a business or may sometime in the future as part of an exit planning strategy, we would welcome the opportunity to talk with you about your business.
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The information included in this newsletter is derived from publicly available sources. Our intent is to give a perspective on the industry taken as a whole. The inclusion of a transaction in this newsletter does not imply that The Principium Group acted as an advisor to either of the parties to the transaction. It is the policy of The Principium Group always to maintain the confidentiality of its client relationships. For those transactions in which The Principium Group did play a role, the information included herein is still limited to that available through public sources.
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