Green Merger News – December 2012

Commentary -Season’s Greetings from The Principium Group

 

At this time of the year, we pause to thank our clients, colleagues and friends.  The friends we have made and the relationships we’ve developed across the country mean a great deal to us and we are truly thankful.

 

This is the time of year when many of us are reevaluating and planning for the coming year.  For some of you, that will include considering an acquisition.  For others, it will mean considering the sale of your business.  Many more will include long-term exit strategy planning in their thoughts.  If any of these are on your agenda, we would welcome the opportunity to speak with you.

-Ron Edmonds

Email me

Call me direct at 901-351-1510

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Increasing Your Chances of Getting an Offer 

 

The Principium Group has partnered with The Sellability Score for over a year now.  Many clients and industry friends have taken the 13-minute Sellability Score quiz and received their Sellability Score and a detailed report.

The Sellability Score is a cloud-based software tool that allows a business owner to assess the “sellability” of their company. It was developed by John Warrillow, author of the best-selling business book, Built to Sell: Creating a Business That Can Thrive Without You. The researchers at The Sellability Score analyze the data from users to understand trends in the business market, with a special focus on the liquidity of privately held businesses.

Researchers from the Sellability Score recently focused on the relationship between key performance indicators of businesses using The Sellability Score and isolated those that had received an offer to buy their company in the past 12 months.  They identified 10 factors that increase the likelihood you will receive an offer to buy your business.

Number One

You are almost twice as likely to get an offer if your business can survive the “hit by a bus” test.  Sixteen percent of Sellability Score users who say their business can run without them have received an offer to buy their company in the last year, compared to 9% who could not pass the “hit by a bus# test. In other words, you’re almost twice as likely to get an offer if your business can thrive without you.

Number Two

You’re twice as likely to get an offer if you could easily replace your top sales person. Eighteen percent of Sellability Score users who say it would be easy or fairly easy for them to replace their most important sales or marketing person have received an offer to buy their company in the last year, compared to 9% who say it would be impossible to replace their  top person. In other words, if you’re completely unprepared to replace your top sales person, you’re half as likely to get an offer.

Number Three

If you, as the owner, are doing all of the selling, you’re less than half as likely to get an offer.  Sixteen percent of Sellability Score users who say they are responsible for less than 75% of sales have received an offer to buy their company in the last year, compared to 6% who say they are responsible for more than 75% of the company’s revenue. In other words, if you’re doing most of the selling yourself, you’re less than half as likely to get an offer.

Number Four

Companies that could replace their top product / service design & delivery person almost twice as likely to get an offer.  Fifteen percent of Sellability Score users who say they could replace their top product/service design & delivery person have received an offer to buy their company in the last year, compared to 8% who say it would be impossible to replace their top design & delivery person.

Number Five

Size matters.  Larger businesses are twice as likely to receive an offer as very small ones.Twenty percent of larger company Sellability Score users have received an offer to buy their company in the last year, compared to 9% of the smallest Sellability Score users.  Mid-size companies  are one and a half times as likely to get an offer as smaller companies.

Number Six

Companies that can replace their key supplier(s) are almost twice as likely to get an offer.  Fifteen percent of Sellability Score users who say they could replace their key supplier(s) have received an offer to buy their company in the last year, while only 8% of those who couldn’t have received an offer. In other words, if you are confident you could replace your top supplier(s), you will be more than twice as likely to receive an offer.

Number Seven

Younger owners getting offers at twice the rate of their parents – buyers keen to acquire young growth companies. Twenty-six percent of Sellability Score users who are young business owners (age 32 and below) have received an offer to buy their business in the last year, whereas only 12 % of older owners received an offer.

Number Eight

Companies with a management team (as opposed to a sole manager) are getting offers at almost twice the rate. Sixteen percent of Sellability Score users whose companies have a management team have received an offer for their business over the last year, compared to 9% of those companies that have a sole manager. This means you are almost twice as likely to get an offer if you have some form of management team.

Number Nine

Companies with a strong social media following are almost twice as likely to get an offer. Twenty-three percent of Sellability Score users whose companies have at least 10,000 “followers” (e.g., e-mail “opt ins,” Facebook “Fans,” Twitter “Followers,” etc.) have received an offer for their business in the last year, compared to 13 % of companies that do not have a large contingent of followers. This indicates that you are almost twice as likely to be of interest to an acquirer if you build up your connections, fans and followers.

Number Ten

Companies with more recurring revenue are more likely to get an offer.  Fourteen percent of Sellability Score users whose companies have “recurring revenue” that makes up more than 25 % of their total revenue have received an offer for their business over the last year, compared to 9 % whose recurring revenue was less than 25%. This indicates that your company is much more attractive to buyers if you have created a recurring revenue stream.

We will be conducting a special webinar focusing on these and other lessons from The Sellability Score and their applicability within the green industry on January 17, 2013 at 1:00 PM Eastern Standard Time.  To receive an invitation to this webinar, just take The Sellability Score quiz.  Click here to get your Sellability Score and an invitation to the webinar.  Clients and friends who have already received a Sellability Score will receive their invitation by email.

Recent Transactions

 

The Landscape Partners of Fort Worth, Texas has acquired Western Lawns, a full-service commercial landscape maintenance company in Oklahoma City.  The Landscape Partners now has offices in Fort Worth, Dallas and Oklahoma City.

Sarasota-based Arrow Environmental Services, has acquired Can Eliminate Pest Control in Fort Myers, its eighth acquisition in five months.

Rentokil Pest Control has acquired Eden Advanced Pest Technologies of Olympia, Washington.

Atlanta-based Arrow exterminators has acquired Terminator Pest Control of MIssissippi.

 

Editor’s Note:  Next month, we will be featuring the annual “Year in Review” of green industry merger & acquisition transactions reported during 2012.  While we scour every source we know to find transactions, we know we miss some. Of copurse, many are never publicly announced.  We would appreciate it if our readers would send us an email with information about any transactioins we’ve missed so they can be included in the annual review.

 

Preparing to Sell Your Business

New E-Book Available for Download

 

Preparing to Sell Your Business – A Guide for Green Industry Business Owners, a new e-book by Ron Edmonds of The Principium Group has just been published.  The 30 page e-book explores both preparing yourself (as a business owner) to sell your business and preparing your business to be sold.

Preparing to Sell Your Business is available for download  from The Principium Group.  Click here to download it.

Do You Understand the Value of Your Business?

Consider a Market Value Assessment

 

Understanding the Value of Your Business is an important step in the Exit Planning Process.  Most business owners do not have a clear idea of the value of their business or understand the important factors that drive that value.  Understanding the value of your business will help you plan for the future and will also allow you as a business owner to take constructive steps to improve that value over time.

The Prinicpium Group offers a cost-effective approach we call the Market Value Assessment.  The Market Value Assessment provides a valuation for your business based on established methods and industry conditions for planning purposes.  It also will specifically identify importqant factoprs that affect the value of your particular business.

If you are interested in learning more, please click hereemail us or call Ron Edmonds at 901-351-1510.

 

WEBINAR:

Planning for Profits in 2013

with Jeffrey Scott

Friday, December 21, 2012 11:00 AM EST (10:00 CST, 9:00 MST, 8:00 PST)

Learn from leading landscape firms and best practices developed by Jeffrey Scott

Learn How The Best Operate!
There are a thousand ways to run a company, yet only a few proven ways to build your business profitably. You will learn the best practices, tools, techniques and stories on how to build your business profitably and plan for better results in 2013.

Immediately Improve Profitability and Strengthen Your Business
– Apply a balance of “Descriptive vs Prescriptive” leadership styles
– Maximize the profit of each division
– Create “Ownership Thinking” with your staff
– Use “Triple Win Incentives”
– Increase employee accountability using “Relationship Contracts”
– Delegate authority using the “Decision Ladder”
– Use the “Adult-Adult Communication” model to increase efficiency and productivity  The speaker has traveled the continent, consulting with contractors large and small, facilitating (The Leader’s Edge) landscape peer groups,  observing what works and what doesn’t. He will share with you what you need to know to be more successful in 2013.

Plus, you will learn 4 key steps to growing a successful business. You will identify which steps you are weak on and where you need to improve.

Sign Up Now
Date:   Friday, December 21
Time: 11am EST, 10am CST, 9am MTN, 8am PST
Cost:   No charge To reserve your webinar seat, cut and paste this link:
www1.gotomeeting.com/register/982440465

 

Books by Ron Edmonds

 

Green Exit:  Exit Planning for Lawn and Landscape Business Owners

Charting a Course:  Acquisition Strategy in the Green Industry

How to Sell Your Green Business

Also available for Kindle, Nook and iBooks.

Also available from Amazon.com and other online retailers.

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