Published on March 3, 2014
Landscape Industry Mergers & Acquisitions 2014 Ron Edmonds
$50 Plus Billion Industry is Highly Fragmented
Top Four Companies Have Only a 6% Market Share
Top Four Companies • The Brickman Group • ValleyCrest • Davey Tree • TruGreen Landcare
Top Four - Ownership • Brickman - KKR • ValleyCrest - MSD Capital • Davey Tree - Employees & ESOP • TruGreen Landcare - Aurora Resurgence
Regional/Inter-Regional Players • $50-150 million • Usually in one region • Some have operations in multiple regions
Regional/Inter-Regional Players - Examples • Ruppert (Mid-Atlantic, Southeast) • Gothic (CA, TX, West) • The Groundskeeper (AZ, NV, NM, TX) • Yellowstone (GA, FL, TX) • Others
Local & Regional • $7.5 - $50 million • Estimated 200 plus companies • Varying ownership • Some "below the radar"
Local • $1 - $7.5 million • Usually founder owner • 100s of companies • Significant number of underperforming and/or plateaued businesses • Significant acquisition opportunities
Small Local • Under $1 million • Usually highly dependent on owner/operator • 1000s of companies • Usually poor acquisition targets
Valuation • Typical range of 2 to 5 times adjusted EBITDA, mostly 3-4 • Depends on size, business mix, systems, working capital, capex requirements, profitability and growth prospects, synergies
Valuation • Mostly pretty disciplined • Valuations are often not exciting to sellers (Example: $400 annual cash flow produces $800k to $2 million valuation pretax)
Best Opportunities • Sellers with a reason to sell • Age, health, family issues, just sick of it
Current M&A Activity • Highest activity in the last six years • Buyers seeking opportunities as the economy & construction revives
Current M&A Activity • Brickman transaction has brought the industry attention (If KKR thinks it is a good investment…). • Significant private equity interest
Current M&A Activity • Backlog of potential sellers due to low level of activity during recession
Current M&A Activity • Still neither a buyers' or sellers' market. • Buyers are generally highly disciplined, especially as it relates to valuation
Industry Headwinds • Immigration reform • Minimum wage increase • Obamacare
Industry Headwinds • Rising interest rates • Political gridlock • Risk of economic downturn
Minimum Wage Increase 12 10 8 6 4 2 0 Current President Obama's Proposal
Building Value • Grow profits • Move the multiple
Growing Revenue & Profits • Organic growth • Acquisitions • Not a simple decision which is best
Why Acquisitions Fail • Overpaying due to competitive issues or pressure to grow • Inadequate due diligence • Inadequate integration plan • Poor execution
Our Forecast • Continued industry growth at reasonably strong levels in most markets for the next 3-4 years.
Our Forecast • Strong M&A activity for at least the next two years. • Multiple private equity investments in the industry.
Our Forecast • Large industry players will be aggressive buyers again. • Some regional/inter-regional players will grow significantly and rival the national players.
“This is a very interesting time for green industry mergers and acquisitions.”
Ron Edmonds 888-229-5740 email@example.com
Mergers & Acquisitions . Industry Review: Landscape Services . Ron Edmonds . The Principium Group . October 2014 . www.principiumgroup.com ...
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