|Commentary – Building Long-Term Value
Although the snows of the Winter of 2010-2011 have only been gone for a few weeks, most businesses in the industry are well into their Spring seasons. For many business owners, it is hard to focus on anything other than making sure everything is running smoothly as the season begins.
If you are trying to build the value of your business and unlock its potential, it is easy to lose sight of that goal when you are totally focused on day-to-day operations. Building value requires taking a long-term view and being able to make those incremental changes to your business that will demonstrate its value to a buyer.
When you are ready, we’d be glad to speak with you about building long-term value in your business
Swingle Lawn, Tree & Landscape Care, of Denver, Colorado, announced the acquisition of Lawn Care Aeration Plus of Greeley, strengthening its market position in Colorado’s Northern Front Range communities.
Bartlett Tree Experts announced that it has acquired the business operations of Preservation Tree Care in Beaufort, South Carolina, and Native Son Landscape & Tree Care in Wimberley, Texas.
Arrow Environmental Services of Sarasota, Florida, recently acquired the operations of Seminole-based Ultimate Pest & Termite Control, which serves Pinellas and Hillsborough counties. Late last year, it also acquired Largo-based FloridaCare Pest Management and Kelly’s Pest Control in Sarasota. Arrow Environmental offers residential and commercial pest control, lawn care, wildlife exclusion, and tree and shrub care services. Its total revenues approximate $6 million.
In its recently filed annual report on Form 10-K for the year ended December 31, 2010, The Davey Tree Expert Company disclosed that it had invested approximately $7 million in acquisitions in 2010.
The ServiceMaster Company recently announced the appointment of Hank Mullany to succeed retiring Chief Executive Officer J. Patrick Spainhour, effective March 31. Mullany and Spainhour will begin working together immediately to implement a smooth transition.
ServiceMaster is the parent company of TruGreen,TruGreen LandCare, Terminix, and other consumer brands.
Mullany previously served as executive vice president of Walmart U.S. and president of Walmart’s northern U.S. business, Mullany was responsible for the operation of 1,300 stores and 34 distributions centers across 19 states, leading 400,000 employees.
Earlier in his career, Mullany served in various senior management positions, including as president of Genuardi’s Family Markets in Pennsylvania. .
This article is excepted from a report by BizBuySell.com based on a survey of business brokers in which we participated. We find the results of the survey both interesting and encouraging.
A recent survey of the nation’s business brokers on the state of the business-for-sale market has encouraging news for business sellers. The survey was completed by BizBuySell.com, the online business for sale marketplace.
76% of responding brokers nationwide anticipate that 2011 will be a good year to sell. A generally positive feeling about economic recovery seems to be the driving factor for the encouraging reports about the business-for-sale market this year. More than two thirds of the brokers – 69% – who anticipate that this year will be a good year to sell a business cite “the economy in general is starting to recover” as driving their bullish outlook. Other top reasons for optimism cited by brokers include “more businesses coming on the market” and “better financing becoming available for business buyers.”
“Business owners who have been sitting on the fence ready to sell for over a year will probably get off the fence and put the business on the market,” explains one responding broker. “While the economy is certainly not great, it is more stable than last year.”
Another respondent expects that 2011 will be a good year for the business-for-sale market “because more people are looking to purchase a business. If financing options improve it could be a banner year for sales.”
“We’re hearing that, while the economy certainly isn’t back to what it was, business owners are starting to feel more confident about it, and they’re seeing a reprieve from the recessionary environment we’ve been in over the past few years. Based on our conversations with business sellers, brokers and buyers, we believe that stable businesses with appropriate price expectations will likely receive quality offers from prospective buyers if they come on the market during the next twelve months.”
A lack of available financing is still the most common factor preventing business transactions from closing. Nearly half of the brokers surveyed, 48%, report financing as the biggest issue hindering business for sale transactions. Seller unwillingness to lower their asking price is an additional issue, with 26% of the brokers surveyed reporting it as a primary factor preventing sales from closing.
Other factors seem to be having little effect on the business-for-sale market. 62% of the brokers surveyed said that the Small Business Jobs Act has not affected business owners’ desire to sell. “I think many small business owners are still unaware of the changes and how they can benefit from them,” explains one survey respondent. “Many of these people are too busy or burnt out to keep up with the latest information.”
The extension of the favorable long-term capital gains tax rate is having a slight effect on the business-for-sale market in 2011, but will likely be a driving factor for business owners looking to sell within the next few years. 54% of the brokers surveyed noted that the extension will have little effect on the market this year, but as one respondent notes “sellers are unsure of what the rate will be after 2012, so many are positioning a sale within the next two years.”
“As more business owners become aware of the potential capital gains tax rate increase after 2012, we anticipate they may be more inclined to want to sell in the next year or two,” according to BizBuySell.com.
Most respondents still don’t believe business transaction volumes will return to pre-recession levels for at least 18 months. Of the respondents, 66% predict that business transaction volumes won’t return to pre-recessionary levels for at least another 18 months, a slight increase from the 62% of brokers who responded similarly in November, and 53% in July.
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.
Contact us by email or call us at 888-229-5740 today to discuss scheduling an Exit Planning Assessment for your business.
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