January 2018 The Year in Review – The Third Wave Landscape Industry Consolidation

To our clients and friends:

We are pleased to present this edition of Green Industry M&A News. In this edition, we review lawn and landscape business sale activity in 2017.

I have recently been working on a project to analyze historical consolidation activity in the landscape industry – what’s happened, what worked, what didn’t, who was successful and why. As I worked on that project and also as I reviewed 2017 transactions while preparing this annual edition of Green Industry M&A News, it occurred to me that we are presently in the midst of what I am now calling the Third Wave of consolidation of the landscape industry.

The First Wave of consolidation was led by LandCARE USA and what would become known as TruGreen Landcare in 1998 and 1999. In reviewing the pace of transactions in those two years, I find it nothing short of amazing that so many transactions got done in so short a time.

The Second Wave moved more slowly and deliberately. It emerged in the late 2000s and early 2010s and was characterized by the emergence of The Brickman Group, Ltd. and The ValleyCrest Companies as the undisputed industry leaders. The wave slowed considerably after 2011 and ended definitively with the acquisition of Brickman by KKR&Co. and the subsequent Brickman/ValleyCrest merger which created today’s BrightView.

The current Third Wave of industry consolidation is far broader than the first two waves. It is primarily led by a number private equity groups which have either already invested in the industry or are seeking to, along with several active strategic buyers. In this year’s review we count ten new platform investments, including seven landscape services companies and three closely-related companies. There was one private equity exit with Terracare Associates being acquired by fast-growing Monarch Landscape Holdings, a portfolio company of One Rock Capital.

The robust activity level extends well beyond the larger companies being sought by private equity and strategic buyers. BizBuySell reports that there were 191 landscape businesses sold through its online marketplace in 2017. Those 191 companies had median revenues of $350,000, median cash flows (seller’s discretionary earnings) of $100,000 and sold for a median $155,000.

If you would like to discuss how this marketplace activity affects your business and your plans, please give me a call at 901-351-1510 or send me an email. We would welcome the opportunity to speak with you.

The Year in Review

Here is our annual recap of reported merger & acquisition transactions involving lawn, landscape and related businesses for 2017:

Private Equity Platform Investments

Bain Capital Double Impact and SJF Ventures acquired Living Earth Technology in Texas  More information
CI Capital acquired SavATree in New York More information
ClearLight Partners acquired Moore Landscapes in Illinois More information
CVF Capital Partners provided mezzanine financing for Signature Coast Holdings, the result of a merger of Signature Landscape in Nevada and Coast Landscape Management in California More information
Great Range Capital created HeartLand LLC in Kansas (transaction in 2016, reported in 2017) More information
Prospect Partners invested in Bland Landscaping in North Carolina More information
Trinity Private Equity Group acquired Gold Landscaping in Texas More information
ZS Fund led a recapitalization of Juniper Landscaping in Florida More information
BHMS Investments acquired Advanced Service Solutions in New Jersey (reported in 2018) More information
Soundcore Capital acquired Sweeping Corporation of America in Nashville More information
Private Equity Add-on Transactions
BrightView acquired Girard Environmental in Florida More information and Marina Landscape in California More information
Canopy Lawn Care  acquired Grass Monkey in Raleigh More information , the residential accounts of Greenview Partners in North Carolina More information , the residential accounts of Southscape Landscaping More information
Chenmark Capital invested in Maffei Landscape in Massachusetts More information   and Piscataway Landscaping & Tree Service in Maine More information
Environmental Pest (Bug Out) acquired  Pro Lawn-Plus in Florida More information
HeartLand LLC acquired Signature Landscape in Kansas (transaction in 2016, reported in 2017) More information,  Keesen Landscape Management in Colorado (transaction in 2016, reported in 2017) More information‘ and Summit Services in Colorado More information

Landscape Workshop acquired Henkel Denmark in Kentucky  More information and Gro’s Landscape Maintenance Accounts in Alabama More information

Monarch Landscape Holdings acquired Terracare Associates in Colorado  More information
Rotolo Consultants Inc.acquired Massengale Grounds Management in Louisiana More information and Greenscape Grounds Management in Louisiana More information
SavATree acquired Swingle Tree, Lawn & Landscape in Colorado More information, Thrive Plant Health Solutions in Virginia More information, and  Mountain High Tree,  Lawn & Landscape in Colorado More information
SCG Partners acquired two undisclosed landscape companies in Florida
Terracare Assocates acquired Land Systems in California More information and Hort Tech in California More information  (Terracare was subsequently acquired by Monarch)
TruGreen Lawncare acquired Lawn Dawg in New Hampshire More information and Turfmasters in Connecticut More information
Yellowstone Landscape acquired Ecoscape Solutions Group in North Carolina More information and Heads Up Landscape Contractors New Mexico More information
Other Landscape Transactions
Blondie’s Tree House merged with Opiary in New York More information
Borst Landscape acquired Magnolia Landscaping Corporation in New Jersey More information

Davey Tree Expert Company acquired Arborel Tree Service in Pennsylvania More information  and Arborguard in Georgia More information

DSC Solutions acquired Handy Helpers Landscape in Pennsylvania More information
Gothic Landscape acquired Terra Pacifica in California More information
Grundstrom Landscape Maintenance in Illinois was acquired by an undisclosed private investor More information

Prescription Landscape acquired Arteka Outdoor in Minnesota More information

Rentokil Steritech acquired Heron Pest Control in Florida More information
Senske Services acquired Turf’s Up in Washington More information
International Transactions
Gristwood and Tom acquired Foremost Treesurgeons in the United Kingdom More information
Advancer Global acquired  Envirocare in Singapore More information
Nurture Landscape acquired the landscape maintenance operations of Frost Group in the United Kingdom More information
US-based Dwyer Group acquired the Countrywide Grounds Maintenance franchise system in the United Kingdom More information
Facilities Services Transactions
ABM acquired Ohio-based GCA Services More information
DBi Services acquired TME Enterprises Inc. in Virginia  More information and  Reforestation Services Inc. in Oregon More information
Kellermeyer Bergensons acquired Varsity Facility Services in Utah More information
SecurAmerica acquired Chattanooga-based ERMC Facilities Management More information
Sweeping Corporation of America acquired Ohio-based Sky Sweeping More information and Pennsylvania-based Reilly Sweeping More information
Landscape Supply Transactions
SiteOne Landscape Supply acquired the following businesses:
Marshall Stone in North Carolina More information
South Coast Supply in California More information
Evergreen Partners in North Carolina More information
Pete Rose in Virginia More information
AB Supply in California More information
Angelo’s Supplies in Michigan More information
Stone Forest Materials In Georgia More information
Aspen Valley Landcape Supply in Illinois More information
Harmony Gardens in Colorado More information
TreeTown USA acquired Village Nurseries in California More information

A Look at Lawn Doctor’s Acquisition Program

I recently had the opportunity to spend a couple of days at Lawn Doctor’s National Franchise Conference. It was a very interesting event. Lawn Doctor is celebrating its fiftieth anniversary, which is really amazing. I met many interesting people at this event, many of them Lawn Doctor franchise owners. As a group, they do quite well and have lots of company support.

Lawn Doctor has launched a program to encourage its franchisees to make acquisitions. The Company’s objective is to have strong, growing franchisees and they believe acquisitions can be a great way to help make that happen. The Company believes acquisitions by franchisees can be a such a positive thing that they are providing substantial support to franchisees who make an acquisition, providing a significant amount of financing and offering other incentives.

Scott Frith, Lawn Doctor’s CEO puts it this way, “We want Lawn Doctor, through its franchise network, to be the acquiror of choice for lawn care business owners considering selling.”

I have been saying for some time that it is time for a “new number two” to emerge in lawn care. Perhaps Lawn Doctor will be the one that fills that void.

To learn more about the opportunities for lawn care operators, contact us.

Next Steps for Business Owners

We often speak with green industry business owners about their exit planning process.  They often don’t know where to start.  Here are a couple of suggestions:
Get your ValueBuilder Score.  You can use this tool to get a better understanding if hw ready you may be to sell your business and steps you can take to improve the value if your business.  After answering some questions about your business, you will immediately receive your numerical score.  We will also send you a detailed report with recommendations.
Understand the value of your business.   Many business owners are relying on the value of their business to fund their retirement or other future activities, but few business owners really understand the value of their businesses.  This is a critical step in improving and unlocking that value.
If you are interested in understanding the value of your business, consider having Principium prepare a confidential, cost-effective market value assessment.
About The Principium Group
The Principium Group provides advisory services related to mergers & acquisitions and exit planning to lawn, landscape, pest control and facilities services businesses. 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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Chris Martin
BRE #01966513, LICENSED IN CALIFORNIA
[email protected]
888-229-5740, ext 103
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Austin Grisham
888-229-5740, ext 104
NOTICE:  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.