|Commentary – Is it a “Buyers’ Market” or a “Sellers’ Market”?|
Over the past week or so, I have read two articles with intriguing headlines. One proclaimed “It’s a buyer’s market” while the other suggested that it’s a sellers’ market. The difference between those two headlines really struck me.
The two articles were actually on seemingly completely different topics. The article proclaiming a buyer’s market was reporting on developments in the housing market while the other article was attempting to analyze the business for sale market.
I do not claim to be an expert on the housing market. I do, however, closely follow the business for sale marketplace. My experience has been that there are always more “buyers” than “sellers”. I decided to put quotation marks around both buyers and sellers in the preceding sentence because there is a big difference between a real likely business buyer and a typical person who surfs the internet looking for business opportunities. Likewise, there is a big difference between a potential business seller who dips a toe into the marketplace to better understand the value of his or her business or find out if there may be an easy opportunity to cash out and a business owner who approaches the sale if his or her business as part of a well-thought out and planned exit strategy.
So are we experiencing a sellers’ market or a buyers’ market in the green industry right now? That is very hard to say. It is clear that there are more buyers examining opportunities now than over the past three years. However, for the most part, buyers remain cautious and disciplined in their approach to analyzing opportunities. I suspect that situation will continue for some time to come. On the other side of the equation, we are seeing greater interest among business sellers as well. We suspect that is more a factor of the low number of transactions completed during the recession than a significant increase in sell-side interest.
So where does that leave us? There is demand among buyers for high quality lawn, landscape and related businesses now. There are also quality companies actively considering the sale of their businesses. Is it a “buyers’ market” or a “sellers’ market”? I wouldn’t call it either one. But I would tell you there are good opportunities for both buyers and sellers in this market.
As always, if you are considering buying or selling a green industry business or are interested in exploring the exit planning process, we would be happy to speak with you.
The Brickman Group announced its entry into the Los Angeles market with the acquisition of The Dworsky Companies, a leader in the landscape services industry in the Los Angeles market, ranking 85 on Landscape Management’s LM 150. The acquisition gives Brickman a foothold in one of the least major markets it has yet to serve. [The Principium Group represented Dworsky Services in connection with this transaction.]
Sarasota-based Arrow Environmental Services has acquired Tampa-based Young Pest Control. With the completion of this transaction, Arrow reports that it has grown its annualized revenues to $8 million. The reported $2 million transaction brings Arrow into Tampa, Lakeland, Fort Myers and Naples. Arrow offers residential and commercial pest control services as well as lawncare services. economy regains strength.
In the facilities management sector, EMCOR Group, Inc. has announced that it has entered into a definitive agreement to acquire USM Services Holdings, Inc. (“USM”), a leading provider of facilities maintenance solutions in North America. Landscape services are a part of the portfolio of services offered by USM. USM has revenues of approximately $375 million, of which approximately $133 million are landscape services-related. USM ranked number 7 on Landscape Management’s Top 150 in 2010.
Horizon Distributors, Inc. (Horizon), a full-service distributor of landscape and irrigation products, today announced its expansion into the Florida market with the acquisition of certain assets of the Kilpatrick Companies (Kilpatrick), a Boynton Beach-based distributor of landscape and irrigation products and provider of equipment services with sales throughout South Florida and the Caribbean Basin.
New Hampshire-based Natural Technologies, Inc. announced that it has acquired Fire Belly, Inc. and its Fire Belly® Organics, a unique six-step, natural, organic lawn care program, offered to both lawn care companies and the do-it-yourself market.
Hines Growers, LLC has entered into a letter of intent to sell assets from its Fresno, California, Chino Valley, Arizona and Fulshear, Texas nurseries to Colorspot, Inc. Colorspot is based in California and has growing facilities in California and Texas. Hines says it will increase production at its three remaining nurseries in Fallbrook and Winters, California and Forest Grove, Oregon.
A Cost-Effective Way to Get Started on the Exit Planning Process
An Exit Planning Assessment from The Principium Group is a confidential, cost-effective first step in the exit planning process. Here’s what it includes:
· We will develop an understanding of your business, your personal situation and objectives.
· We will make an assessment of the value and marketability of your business. (This will not be a formal business valuation for third-party use, but will give you an idea of the value your business could bring under current circumstances.)
· We will provide concrete recommendations for improving the value and marketability of your business as you make plans for your ultimate exit.
We will provide feedback on your objectives and how to develop a plan to achieve those objectives.
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