Last week Tom Fochtman, Ceibass CEO, spoke on a panel at the 2018 Lawn & Landscape Top 100 Executive Summit in Denver, Colorado. The Summit is an intimate conference exclusively for owners and c-suite executives from Top 100 lawn and landscape care companies.
“This invitation-only event was a great opportunity to network with the biggest and most successful companies and executives in our commercial lawn & landscape industry,” said Tom Fochtman. “It was a delight discovering what is top-of-mind for these powerful leaders, what their assessments are about the current situation and the future, and what are some of their top concerns.”
So what was the “buzz” around the TOP 100 Executive Summit? Here’s a quick look according to Tom:
- Interest in commercial M&A activity has never been higher.
- Multiples have never been higher.
- Lots of competition from buyers for companies. Great time to be a seller. Actually, best time ever for sellers.
- Interest rates are going up. There’s a vibrant economy. We’ve exceeded our historic up-cycle length by three years…maybe 2 more years of this strong economy…maybe. Mood is aggressive. Everybody has the gas pedal down. They know an economic decline is imminent but it’s not holding anybody back from investing in their businesses and making it happen.
- Buyers love commercial landscape maintenance for the recurring revenue model that defines this business.
- Buyers like our industry because due diligence is straight forward:
- Can verify growth; in revenue, employee numbers, jobs, etc.
- Can look & verify contracts, history, revenue streams, renewal rates
- Can look at “jobs” and see how profitable or not profitable they are
- Love margins on all higher margin revenue like irrigation, renovations, snow, etc.
- Grass grows, has to be cut. Snow has to be removed. Love the predictability.
- Everyone’s challenge is LABOR.
- Most companies could be showing greater growth but are restricted by labor shortage.
- Getting the work is not that difficult, getting it done – because of labor shortage – is difficult.
- Almost all TOP 100 had record year in 2017 and will break it in 2018.
- The good companies are doing at least 10% pre-tax net profits.
- The great ones 15%. The exceptional ones 20%+.