Learn why landscaping has ‘been discovered’
The 2022 Equipment Expo, Oct 18-21 in Louisville, Ky., will feature bigger entertainment stars, a bold new layout and a demonstration area expanded by seven acres. President and CEO of OPEI Kris Kiser recently offered a preview of what will be new at the show. It will also mark the return of a popular seminar: a discussion on the current state of mergers and acquisitions in the landscape industry.
That mergers and acquisitions seminar will be held Thursday afternoon during the conference and moderated by industry veteran Judy Guido, chairwoman of Guido and Associates. The topic is an ever-evolving one in the industry and panelists will be on-hand for an “ask me anything” question and answer session.
To learn more about the topic, Landscape Management spoke with an expert in that field, Tom Fochtman. Fochtman, was co-owner of a landscape company for 20 years. His partner bought him out, a process that took more than a year to complete. It was observing that yearlong process that led him to his next career.
“I realized the baby boomer generation is big at 78 million people, and I knew there was going to be a lot of baby boomers in all industries that needed help in exiting,” Fochtman recalls. “I had been so entrenched in the landscape industry. I knew my peers needed help. I learned investment banking in the year I knew took off. I didn’t want to retire. I knew there was a need, and it was a good vertical. I didn’t know it was as good as it has been.”
Fochtman is now the CEO of Ceibass Venture Partners, a company that helps green industry business owners plan, prepare and execute the sale of their businesses. In January, Ceibass helped complete the sale of a $13 million landscape company and a $3 million landscape company. The largest sale the company ever completed was for a $64 million company.
Fochtman says there are at least 20 active private equity groups monitoring the industry. But that number could jump to 300 or 400 groups that want to at least look at a company if the transaction is big enough.
“Landscaping has been totally discovered, especially the reoccurring revenue side of it,” says Fochtman. “It has never been like this, ever. It may start to change with the economy, the market, the war, the rates going up, all those factors. Still, I’m talking to a family office right now that wants to be in the green industry. We have yet another new buyer.”
As a preview of the Equip Expo seminar on mergers and acquisitions, LM asked Fochtman to provide advice for business owners on how to be properly prepared for when it’s time to sell. He offers this advice:
Have a strong management team. “A big fear with a buyer is, ‘Yeah, you tell me that you want to stay on, but soon after, you’re gone, and I don’t have anybody to run it.’ It’s really important to have a strong middle management team, strong department heads, and call it a strong GM, a no. 2 persons It’s great if an owner has worked him or herself out of a job.”
Keep up with capital expenditures. “I know of a company that did not keep up with capital expenditures, and a company looked at it and said, ‘I think there is a dent in every single one of their trucks, and they’re old. A lot of them have over 100,000 miles.’ We can help those companies exit, but there’s going to be a discount on the price because the buyer is going to think it has to put a half-million (dollars) in right away.”
Be the best of class. “We’d like every client to be what I call best-of-class. That’s having a renewal rate of 90 percent or better if you’re maintenance. So, a good safety culture. Have a good facility, where it’s well located, and it’s big enough, even if you rent it.”
Visit EquipExposition.com to see all the educational seminars offered at the 2022 EQUIP Expo show.