The enterprise value specialists at Ceibass have seen firsthand the influx of private equity into the lawn and landscape industry. These professionals are often asked by green business owners what changes private equity brings to the industry? What does the future of the green industry look like? What trends do they see? And what can these owners do to make their companies more attractive to private equity?
“Let’s get this straight, private equity firms typically invest in companies with the goal of growing them, and selling them for a profit in a few years. They bring a keen eye for management and profits to the table,” said Tom Fochtman, Ceibass CEO. “To achieve this, private equity firms want the fleet and equipment to be current, they are often eager to invest in new technologies that can help companies operate more efficiently and effectively. This can lead to changes in workflow, job duties, and customer interactions. They also often invest in expanding marketing and sales efforts. This can lead to more aggressive marketing campaigns and sales pitches. And they are ultimately focused on increasing the profitability of their investments. This can lead to changes in pricing, staffing, and other operational decisions.”
So what’s coming next and what does the future of the industry look like? And what should owners be doing to make their companies more attractive? The Ceibass team got together and shared these ideas:
- Continued consolidation: Private equity firms are likely to continue to consolidate the industry. This means that we can expect to see more mergers and acquisitions in the coming years.
- Increased focus on technology: As technology continues to evolve, we can expect to see more and more lawn and landscape companies adopt new technologies to improve their efficiency and profitability.
- Growing demand for sustainable services: As consumers become more aware of the environmental impact of their choices, we can expect to see a growing demand for sustainable lawn and landscape services.
How can lawn and landscape business owners make their companies attractive to private equity?
- Have fleet and equipment that is current. If they immediately have a capex investment, private equity will discount the price.
- Have a strong track record of growth and profitability: Private equity firms are looking for companies with a history of success.
- Have a clear and concise business plan: Private equity firms want to see that you have a well-thought-out plan for growing your business.
- Have a strong management team: Private equity firms are looking for companies with experienced and capable management teams.
- Have your business and books ready in case the phone rings. It happens. Buyers might solicit them.
- Be willing to exit the business in a few years: Private equity firms typically invest in companies with the goal of selling them for a profit in a few years. Therefore, it is important to be willing to exit the business at some point in the future.
“I believe that we will continue to see more consolidation in the lawn and landscape industry in the coming years. Private equity firms are likely to continue to play a major role in this consolidation. However, there will still be a place for small, locally owned businesses in the industry,” added Tom. “I believe that the future of the lawn and landscape industry is bright. The industry is relatively recession-proof and is expected to continue to grow in the coming years. Additionally, the growing demand for sustainable services will create new opportunities. My advice to lawn and landscape business owners — I encourage you to evolve and adapt and think about the future of your business. Do you want to continue to grow and expand? Do you want to sell your business in the future? If so, you need to start planning now. Really.”