Green Merger News – January 2011

Commentary

 

We are pleased to present the annual Year in Review issue of Green Industry Merger & Acquisition News.  In this issue, we recap many of the merger and acquisition transactions that have been completed in the last  year involving  lawn, landscape and related businesses.  We also take note of key trends we see affecting mergers & acquisitions in the green industry in the coming year.

In our view, the level of  transactions completed this year is an indicator of the underlying strength of the industry.  We recognize that is little consolation to the business owners struggling with the twin challenges of the overall business climate coupled with what in many markets has become brutal competition.

As we look back to the events of the past year, we believe it is a good time to look forward as well.  For some green industry business owners, this is an excellent time to consider strategic acquisitions.  For many others, it is time to begin exit strategy planning.  For still others, now is the time to be considering the sale or merger of a business.  If any  of these are on your agenda, we would welcome the opportunity to speak with you.

——Ron Edmonds

 

 

The Year in Review – 2010

 

2010 proved to be a strong year in mergers & acquisitions within the lawn and landscape industry.  Major industry players and local businesses both made moves to solidify their positions through strategic acquisitions.

This article includes publicly announced transactions within the industry.  Although there were transactions reported in many parts of the country, activity was strongest in New England, Texas and Florida, all of which are key markets for the industry.  Other regions with multiple transactions include the Midwest and Colorado.

Among major industry players, ValleyCrest strengthened its presence in both New England and in Florida, two key markets.   ValleyCrest acquired Waverly Landscape Associates, Inc. of Belmont, Massachusetts.  Waverly operated four branches in the Boston metro area.

In December, ValleyCrest reported that it has acquired two companies in Florida, Nanak’s of Longwood and Raymow Enterprises of Oldsmar.  Nanak’s  ranked 29th while Raymow ranked 99th on the Top 150 for 2010.  ValleyCrest reported that these two acquisitions increased its overall landscape maintenance  business by approximately 10%.

The Brickman Group began the year with the acquisition of The Green Plan, based in the Denver suburb of Broomfield.  With approximately $13 million in revenue, The Green Plan ranked 96th on the Landscape Management 150.

Brickman also acquired First Class Lawn and Landscape of Indianapolis, adding its two branches to Brickman’s six existing branches in the market, solidifying its leadership there.

Yellowstone Landscape Group acquired Texas Services, Ltd., which became the tree services division of Yellowstone’s BIO Landscape & Maintenance unit in Texas.  Yellowstone also acquired Forest Hills Lawn Service, Inc. of Dallas, Texas, marking its first significant operation in its hometown of Dallas, Texas.  Forest Hills became a part of BIO.

The Davey Tree Expert Company acquired Hartney Greymont, Inc. of Needham, Massachusetts. Hartney operates a tree care, lawn and landscape business in New England.

Hartney was an existing ESOP-owned company and was acquired by Davey, the largest ESOP-owned company in the industry.

Environmental Design, Inc. (EDI) and Davey have entered into an agreement to combine their large tree transplanting resources and expertise into Houston-based EDI. The strategic alliance will supplement the marketing of the service nationwide through the Davey network of tree and landscape experts.

Bartlett Tree Experts acquired Preservation Tree Care of Beaufort, South Carolina.

Lawn Dawg, Inc. of Nashua, New Hampshire, announced its first acquisition, Weed & Feed Professional Services of Plymouth, Massachusetts.  Lawn Dawg indicated that the acquisition will expand its commercial services.

Denver-based Swingle Lawn, Tree and Landscape Care acquired Tropic Green Lawn & Tree Care of Denver, Conservative Tree Care, Inc. of Windsor, and Arbor Care Plus of Fort Collins.

SavATree, a Bedford, New York-based  provider of tree, shrub and lawn care services, announced a merger with DeerTech.    DeerTech’s  service program protects shrubs and plants from deer and combines a patented ultra-sound technology with a proprietary treatment program.

SavATree also announced a merger with Autumn Tree Care Experts, expanding SavATree’s presence into the Illinois market.

Although it does not usually announce individual acquisitions, TruGreen Lawncare, a unit of Memphis-based ServiceMaster, continued its tuck-in acquisition program and indicated that it intended to continue to do so.

In a major development late in the year, ServiceMaster reported that it is exploring strategic options relating to TruGreen Landcare, its commercial landscape maintenance business, including the potential sale of the business.

In other transactions:

Atlanta-based Ed Castro Landscape, Inc. acquired Earthtones, an Atlanta-based residential maintenance company.

New Leaf Landscape Maintenance of Southampton, New York, acquired Lion Landscaping of Sag Harbour, New York.

Burhoe Landscaping and Lawn Service of Unionville, New York, has joined The Yard Group, based in Glastonbury, Connecticut.

Noon Turf Care of Hudson, Massachusetts, acquired Lawnmaster Boston West, making the company the largest independent privately owned lawn care company in the state.

New England Irrigation acquired the accounts of Underground Concepts of Hopedale, Massachusetts.

Shemin, The Landscape Supply Company, acquired former Skinner locations in Austin, Lewisville and Houston, Texas.

Horizon Distributors, Inc. expanded its presence in the Las Vegas market with the acquisition of Turf Equipment Supply.

Atlanta-based Arrow Exterminators acquired Armand Pest Control of West Palm Beach, Florida, which provides lawn and ornamental services in addition to pest control and termite services.

Insight Equity II, LP, a Dallas-based private equity fund, acquired a controlling interest in the Tahlequah, Oklahoma-based Berry Family of Nurseries.

The Riverside Group agreed to sell  Waco, Texas-based The Dwyer Group to TZP Group.   Dwyer is a holding company of seven franchise businesses focused on residential and commercial services.  In early 2010, Dwyer entered into an agreement to market landscape services franchises under The Ground Guys brand in the United States.

The Scotts-Miracle Gro Company did not complete any acquisitions during the year.

In a post-script to the unsuccessful acquisition and subsequent closure of the Smith & Hawken stores by Scotts, Target announced that it had acquired the Smith & Hawken brand and other intellectual property from Scotts.  Scotts also announced the planned divestiture of its Global Professional Unit which served nursery and green house growers and specialty agriculture.

 

 

Key Trends for 2011

 

Here are our thoughts about key trends that will impact green industry mergers and acquisitions in the year to come:

· Major industry players will continue to seek strategic acquisitions in an attempt to  strengthen their networks.

· Local and regional companies will also seek to take advantage of strategic acquisition opportunities.

· A number of regional consolidation efforts will emerge as companies seek to take advantage of opportunities  and strengthen their position  in an increasingly compettive marketplace.

· Franchising and similar programs will to continue to grow in the industry, giving independent operators access to marketing and operational support and reducing risks.

· Financing will continue to be a challenge for many potential buyers.

· Buyers will be disciplined in their approach to acquisitions, partly in response to the requirements of their financing sources.

· Long-term tax policy for capital gains and estate taxes will continue to be uncertain, making exit planning challenging.

· Additional consolidation efforts in both lawn care and landscape services will emerge.

· Although the economy is slowly emerging from the recession, the effects of price competition will impact the profitability of the industry, prolonging the recovery for many.  The combination of the recession and serious competition will cause weaker companies to seek exit strategies.

· Valuations will remain soft and will not return to pre-recession levels for some time to come.  The best opportunities will still command premium valuations, however.

· Over time, landscape contractors who shifted their focus to maintenance as construction ground to a halt will return to their traditional business.

· As the economy strengthens, the focus on all things green will become even more pronounced.  Environmentally-friendly businesses within the industry will be increasingly attractive, including those offering organic lawn care and water-efficient landscaping.

 

 

Meet the Principium Team

 

Ron Edmonds is the president of The Principium Group.  In this role, he provides overall strategic direction to the firm.

Ron is also the editor of Green Industry Merger & Acquisition News.  He is the author of How to Sell Your Green Business:  A Guide for Green Industry Business Owners, first published in 2009.

His entire career has included a focus on mergers, acquisitions and divestitures.  Since 2002, he has focused on the green industry and more specifically on lawncare and landscape businesses nationwide.  He has extensive experience with both buy-side and sell-side engagements as well as consulting on exit strategies and corporate development.

Ron holds BS and MS degrees in accounting from Oklahoma State University and is a CPA (Oklahoma, inactive).

Ron enjoys consulting with green industry business owners nationwide.  He also participates in a variety of industry events and is available for on-site presentations and speaking engagements.

You can reach Ron via email at redmonds@principiumgroup.com or by phone at 888-229-5740.

You can also find him on FaceBook (www.facebook.com/ronedmonds) and on LinkedIn (www.linkedin.com/in/ronedmonds)  Feel free to make a connection with him.

Richard Helling is based in the Memphis area. He works with clients in the lawn, landscape and pest control industries.  He has a background in the construction, real estate and hospitality industries. In addition to direct client relationships, he is responsible for research, coordinating contacts with clients and potential clients and writing materials prepared in connection with client engagements.

In addition to his business activities, he is the author of two novels. He holds a B.A. degree in English Literature from Colorado State University where he was a member of the varsity track & field team.

You can reach Richard via email at rhelling@principiumgroup.com or by phone at 888-229-5740.  You can find him on LinkedIn at www.linkedin.com/in/richardhelling

Christopher Martin is based in the Philadelphia area. He works with clients in the lawn and landscape industries.  Prior to joining Principium, he was associated with another merger & acquisition firm. He also previously founded and developed a lawn care fertilization and weed control company which he later sold to a national lawn care company.

Chris is a graduate of the University of California at Los Angeles with a B.S. in Applied Mathematics and a specialization on computing.

You can reach Chris via email at

cmartin@principiumgroup.com or by phone at 888-229-5740.  You can find him on LinkedIn at www.linkedin.com/in/christophersmartin

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