Landscape Management, October 2012

At a glance GrEEN iNDuSTry M A GOOD People can expect to see many deals involving small and mid sized companies in 2013 and things will heat up regionally BAD M A activity in 2012 to 2013 will be driven not by a strengthening economy but by the fact that people are just tired of waiting UGLY A sellers market is still two to four years away ThE iNDuSTry PuLSE becomes more of a liquidation at that point To bring stability to the company during the transition buyers are asking sellers to stay involved in the business longer Harkness says So sellers need to be prepared for employment agreements that keep them in the business for two or three years after the sale The days of taking money and heading to the beach are over he says Like Ruppert Denver based Swingle Lawn Tree and Landscape Care looks at several companies for every deal it strikes It made its most recent move in August when it purchased Saratoga Ventures a lawn services company in Boulder Longmont Colo Practicing patience and making the right buy is crucial says Swingle CEO Tom Tolkacz The right acquisition enables us to eliminate a competitor and bring density to routes he says It also demonstrates to staff and customers Swingles commitment to growing the company Edmonds believes the market will remain disciplined for the foreseeable future I doubt well see a big change in it anytime soon he observes Nobody wants to repeat mistakes Lessons learned is one reason for the discretion the economy is another says Kevin Kehoe consultant at 3PG Group Peoples appetite for taking risks is lower and their profits are lower he says I think people will rest on their pain a little bit more not rest on their laurels but rest on their pain he adds Theyre looking at their house in a good neighborhood and cant sell it right now I think the real estate industry right now is a good analogy for the landscape industry Deals to learn from Edmonds says he sees M A movement most among mid sized landscape companies and that more buyers and sellers are emerging from the recession Among 2012 s most notable transactions Edmonds says is Austin Outdoors acquisition of Cornerstone Solutions Groups maintenance operations in Florida and McKinney Capitals investment in Landscape Workshop Alabamas largest landscape company I believe there are several groups looking to do the exact same thing as McKinney in other markets Edmonds says I could see that kind of thing working in other areas that have long term positive economic outlooks such as Austin Raleigh and Nashville Those are all markets that attract attention LANDSCAPEMANAGEMENT NET OCTOBER 2012 S22 2013 predictions Former CoCal Landscape co owner Tom Fochtman now owns Arvada Colo based consulting firm Ceibass Venture Partners which helps prepare Green Industry owners to sell their companies Fochtman says he is observing interest in the landscape business among private equity firms and wouldnt be surprised if in 2013 they begin investing in landscape companies in a larger way Fochtman predicts firms will invest in the lawn care irrigation and commercial landscape maintenance sides of this business They like the reoccurring revenue part of the landscape maintenance business model and the predictability of the service side of our industry he says While Fochtman theorizes about potential interest among private equity companies in 2013 Edmonds says people can expect to see more regional transactions and activity among lawn care businesses But todays sales are driven not so much by a rebounding economy as by retirement ready owners looking for an exit Theyve waited out the economy for quite a while and now people are tired of waiting says Edmonds LM