2014 M&A GUIDE
Questions to ask yourself
Keep these queries in mind when you
consider your M&A options. By Ron Edmonds
76
FEBRUARY 2014
www.lawnandlandscape.com large companies more aggressively looking
for add-on acquisitions and other private
equity investments in smaller companies in
the industry, while some regional companies
use acquisitions to build their footprints.
One thing is clear, M&A activity is cycli-
cal and hard to predict. These cycles reflect
external factors such as the economy and
interest rates, the health of the industry
and reactions to past M&A activity. Even
today, while landscape services companies
are becoming popular for acquisitions, the
market for lawn care companies is weaker
with TruGreen on the sidelines.
Right now, we have some additional fac-
tors coming into play that business owners
would be well-advised to consider. Because
the level of M&A activity in the industry has
been relatively limited for the past few years,
there are likely to be many business owners
who would like to be able to transition their
businesses who have not yet done so.
In addition, the aging of the baby boomer
generation is expected to increase the number
of potential sellers significantly over the next
few years. Other business owners may con-
sider exiting their businesses over such politi-
cal issues as Obamacare, immigration reform
and an increase in the minimum wage.
Since M&A activity is cyclical and we can-
not predict the future, business owners must
consider their future plans and take steps to
position themselves and their businesses for
the best possible outcome.
If a sale is ultimately in your plans, it is
wise to be able to make a move when an
opportunity arises. Here are some questions
you may want to ask yourself as you consider
your options.
ARE YOU READY TO SELL YOUR BUSINESS?
This is a much more complicated question
than it sounds. It takes some soul searching
and, often, reflection, analysis and planning
to answer it.
I like to break this down further into two
sub-questions, addressing two different facets
of readiness: mental readiness and financial
readiness. We will address them individually.
© THINKSTOCK.COM
O nce again, there is a high level of
interest in mergers & acquisitions
(M&A) within the lawn and land-
scape industry.
There are a variety of factors causing that
high level of interest. There have been some
high profile transactions announced, includ-
ing the acquisition of Brickman by KKR and
the acquisition of a controlling interest in
John Deere Landscapes by Clayton, Dubilier
& Rice (CD&R). In addition, CD&R has
been reconfiguring its investment in Ser-
viceMaster by spinning off TruGreen as a
separate company, all in anticipation of some
sort of “liquidity event.”
These events have focused investors on the
green industry, which seems poised to receive
more investment capital in anticipation
of growing opportunities as the economy
strengthens and construction rebounds.
While these transactions involve some of
the largest companies in the industry and
are not at all representative of what smaller
business owners can expect, the increased
interest in the industry is likely to have a very
positive effect on M&A in the industry over-
all. The ripple effect will likely include some