Sell My Green Business

Excerpts of President Obama’s Comments in New Hampshire:

“… And we’re going to start where most new jobs start — with small businesses.  These are the companies that begin in basements and garages when an entrepreneur takes a chance on his dream, or a worker decides it’s time she becomes her own boss.  They’re companies like ARC Energy, which I just visited before I came here.  It’s a terrific — (applause) — there you go.  A little booster.  (Laughter.)

Now, these folks are hard at work on a new manufacturing process for ultra-efficient LED lights that will make them more affordable for people all across the country and around the world.  The technology they’ve created is the only one of its kind in the entire world.  They’re this little business just on Amherst Street, but they’ve got the potential to revolutionize an entire industry, right here in Nashua.  Right here in Nashua.  (Applause.)

Now, small businesses like ARC Energy have created roughly 65 percent of all new jobs over the past decade and a half.  So we need to make it easier for them to open their doors, to expand their operations, to hire more workers.  That’s why I’ve already proposed a new tax credit for more than 1 million small businesses that hire new workers or raise wages — and a tax incentive for all businesses, large and small, to invest in new plants and equipment.  And while we’re at it, we should eliminate all capital gains taxes on small business investment, so these folks can get the capital they need to grow and create jobs.  And when they start making a profit, they can put those profits back into the business.

Now, that’s particularly critical right now, because bank lending standards have tightened since the financial crisis and many small businesses are still struggling to get loans.

And that’s why today, I’m announcing a proposal to take $30 billion of the money that was repaid by Wall Street banks, now that they’re back on their feet, take that $30 billion and use it to create a new Small Business Lending Fund that will provide capital for community banks on Main Street.  (Applause.)  It’s the small, local banks that work most closely with small businesses.  They usually provide them their first loan.  They watch them through good times and bad.  The more loans these smaller banks provide to creditworthy small businesses, the better deal we’ll give them on capital from this fund that we’ve set up.  And if you combine it with my proposal back in December to continue waiving fees and increasing guarantees for SBA-backed loans, all this will help small banks do even more of what our economy needs — and that’s ensure that small businesses are once again the engine of job growth in America.  Now, I’m convinced we can make that happen.  (Applause.)…”

Click here for the full transcrit of the President’s remarks.

Service businesses and restaurants lead the recovery as business-for-sale closed transaction prices return to levels not seen since mid-2008

San Francisco, CA – January 7, 2010 – According to today’s BizBuySell.com Insight Report, closed business-for-sale transactions declined by 28 percent in 2009, but a recovery that began mid-year continued to gain momentum in the Fourth Quarter.

BizBuySell.com is the Internet’s largest marketplace for buying or selling a small business. The company releases its BizBuySell.com Insight Report on a quarterly basis, reporting changes in closed transaction rates, valuation multiples and other economic indicators for the small business transaction market. Closed transactions are reported to BizBuySell.com by business brokers nationwide.

“Many business owners delayed plans to exit their businesses and retire in 2009,” says Mike Handelsman, General Manager of BizBuySell.com. “In the latter part of 2009, we started to see clear signs of recovery, and 2010 is now shaping up to be a much more productive year for selling and buying businesses.”

Business-for-sale transaction pricing is returning to levels not seen since mid-2008, due to increased demand for small businesses as a result of higher unemployment as well as the slow return of capital available to business buyers.

The median closed-transaction sale price rose 1.4 percent year-over-year in the Fourth Quarter of 2009. Closed-deal sale prices had been dropping steadily in prior quarters, with the three previous quarters recording year-over-year declines of 21 percent, 20 percent and 17 percent, respectively. In the Fourth Quarter, the median sales price stood at $180,000.

Restaurant and Service Businesses Lead the Recovery

While manufacturing businesses and many retail businesses remain less active categories for business-for-sale transactions, the recovery in the industry has been led largely by service businesses and restaurants.

In the Fourth Quarter, restaurant sales were up 1 percent versus prior year sales for the same quarter, while service businesses declined by 4 percent. In comparison, the sale of manufacturing companies was down 27 percent in 2009, and other business categories were down by 20 percent or more.

“As the economy recovers, businesses that don’t require massive capital investment and businesses that appeal to customers who are still not in a strong financial position seem to be more appealing to business buyers,” notes Handelsman. “Business owners in those industries are seeing an opportunity to sell their companies that simply was not there six months ago.”

Business-for-Sale Transaction Recovery Predicted for 2010

BizBuySell.com projects that 2010 will show slow but consistent recovery in the business-for-sale market, citing the following industry drivers:

• Latent Supply. For the past 12-15 months, small business owners have focused on keeping their businesses afloat, and finding ways to earn a living, rather than focusing on a potential exit. That latent supply will begin to hit the for-sale market as the economy and prospects for finding motivated and qualified buyers improves.
• Unemployed Workers Seeking Jobs. With unemployment hovering above 10 percent in most markets, laid off workers will increasingly look to “buy a job” by finding a small business to provide income.
• Easing Credit. With both supply and demand for small business transactions increasing, the remaining key ingredient to return the market to full health is the availability of purchase capital. The Federal Government and the SBA have been focused on helping banks ease their lending restrictions to provide necessary capital to the small business market.
• Baby Boomer Retirees. In addition to the improving market dynamics of supply and demand there is an ongoing macro trend of the U.S. baby boomer population reaching retirement age. As increasing numbers of small business owners near retirement, this trend will continue to bring above average numbers of small businesses to the sale market.

About BizBuySell.com:

BizBuySell is the Internet’s largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell currently has an inventory of over 47,000 businesses for sale, and more than 700,000 monthly visits. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry’s leading franchise directories.

BizBuySell was founded in 1996 and acquired by LoopNet, Inc. in 2004. LoopNet operates the largest commercial real estate listing service online, with more than $500 billion of property listed for sale and 5.7 billion square feet of space for lease. With over 3 million members, LoopNet attracts the Internet’s largest community of commercial real estate professionals. For more information, visit www.bizbuysell.com.

The Senate approved Saturday a bill extending the increase in the guaranteed portion of many SBA-guaranteed loans from 75% to 90% and waiving guaranty fees through February.  This provision is included in the Defense Appropriation bill.   An additional proposal to extend these incentives through September is pending in the House-passed Jobs for Main Street Act.

The incentives, originally included in the Recovery Act in February 2009, are generally credited with convincing banks to re-enter the small-business lending market.  After the SBA announced that the funds were running out in November, there was an avalanche of loan approvals by SBA-lenders.  Applications that came in after the cap had been reached were added to a large waiting list.  This extension is expected to allow the SBA to work through that waiting list.

SBA lending has historically been only a small portion of small business lending, but these provisions have allowed it to return to more normal levels more quickly than other forms of lending affected even more seriously by the credit crunch.

The State of the Union address had encouraging words for small business.  Obama’s renewed call for ending capital gains on small business investment  is positive (if vague).  As to small business credit, the community banks I know don’t want  to have anything to do with TARP money.  I hope he continues to support stimulating SBA lending.
From the text of the speech:

” …We should start where most new jobs do –- in small businesses, companies that begin when — (applause) — companies that begin when an entrepreneur — when an entrepreneur takes a chance on a dream, or a worker decides it’s time she became her own boss. Through sheer grit and determination, these companies have weathered the recession and they’re ready to grow. But when you talk to small business owners in places like Allentown, Pennsylvania, or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they’re mostly lending to bigger companies. Financing remains difficult for small business owners across the country, even those that are making a profit.
So tonight, I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. (Applause.) I’m also proposing a new small business tax credit -– one that will go to over one million small businesses who hire new workers or raise wages. (Applause.) While we’re at it, let’s also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment…”

Earlier this week, I was searching for some information on Lawn and Landscape Online and I noticed an article about Brad Johnson of LawnAmerica in Tulsa’s plans to hike the Appalachian Trail later this year.  It piqued my interest for a variety of reasons – I am originally from the Tulsa area and I am really jealous of the opportunity to spend four months hiking the Appalachian Trail, so I clicked through to the special website he has set up to blog while he is on the trail and soliciting sponsors who will contribute to select charities (and whose contributions will be matched by LawnAmerica).  The website can be found at www.at2010tulsa.com.

His story on the website is very interesting.  He attributes his decision to take on the Appalachian Trail to pondering what he would do if he sold his business (which he is not considering) after receiving an acquisition inquiry from a major lawn care company.

I really didn’t expect that story to have an acquisition angle.

Visit www.at2010tulsa.com to read Brad’s story – and consider supporting one of the charities he’s lined up.  He promises to sneak off the trail every few days and find an internet connection to report on the trip.

January 11 – Houston, Texas – On December 31, 2009, BIO Landscape & Maintenance, Inc. (BIO), a Yellowstone Landscape Group company, expanded its Texas presence through the acquisition of Texas Services, LTD. (Texas Services). Texas Services, a sustainable Tree Care focused Lawn Maintenance and Landscaping Company, is headquartered in Houston, Texas. They were founded in 1976 and currently provide services to Houston, Austin, San Antonio, Dallas and the surrounding areas. Texas Services will now become the Tree Care Department of BIO Landscape & Maintenance, Inc.

Robert Taylor, President of BIO, said, “Texas Services will further expand BIO’s geographic footprint by adding a stationed office in the growing Sugarland area while allowing us to offer an expanded portfolio of sustainable services, including Tree Care, to all of Texas. Jim Sivils, Jeff Hanawalt and Robert Jaynes, who were prior owners of Texas Services, will join BIO’s management staff in key roles. We welcome Jim, Jeff and Robert to the organization and are excited about this expansion. Texas Services brings a team of ISA certified professionals invested in the Tree Care business with a focus in customer service. BIO is honored to partner with this respected Houston icon.”

Jim Sivils, the former majority partner of Texas Services, is the new Strategic Accounts Business Developer for BIO. Sivils commented on the acquisition, “We are excited to join an organization with the same culture and commitment to customer service, safety and employee development. When companies with the same objectives are integrated the opportunities for customer and employee success along with organic growth are a certainty. We are really impressed by the BIO/Yellowstone company structure and relationship, their team focused attitude, how most decisions are left in the operating company hands, the attention to customer needs versus company structure, and the additional benefits offered to Texas Services by becoming a wholly owned subsidiary of BIO. It is safe to say that the future of our company is much brighter and that our customers will continue to be placed first.”

With the addition of Texas Services, BIO now serves 15 counties with a combined workforce of 440 professionals throughout Central and Southeast Texas. The transaction marks the second addition to BIO in 2009. In October of 2009, BIO acquired Outdoor Environments; a Houston based commercial landscape maintenance company.

About BIO Landscape & Maintenance, Inc.

BIO, established in 1982, is a full service sustainable landscape contractor providing turnkey landscape services.  These services include landscape and irrigation installation, maintenance, tractor mowing, colorscaping, athletic fields, Tree Care and green programs.

A natural leader in the landscaping industry, BIO has established itself as a leading green advocate in the industry with its compost tea program, organic BIOLife fertilizer and propane powered maintenance equipment. BIO’s green capabilities were realized when it was chosen to install and maintain Shangri La Botanical Gardens, the first Platinum LEED certified job in the state of Texas.

BIO Landscape & Maintenance, Inc. is active in the community, with staff serving on a variety of philanthropic committees along with industry related groups including The Greater Houston Partnership and Texas Nursery and Landscape Association. Other industry affiliations are with Associated Builders & Contractors, Associated General Contractors, NAIOP, the Houston Apartment Association and the U.S. Green Building Council.

In April of 2008, BIO became a member of the Yellowstone Landscape Group, a national leading green and sustainable full service landscape management company.

About Yellowstone Landscape Group

Yellowstone Landscape Group, headquartered in Dallas, Texas, is a national landscape leader dedicated to serving the growing demands of the commercial, municipal, institutional, resort, multi-family and estate markets by offering a comprehensive service solution of green and sustainable practices with an emphasis on protecting, enhancing and increasing property values in a variety of geographic locations.  Yellowstone currently serves customers in Georgia, Texas, Virginia, Tennessee, South Carolina and Florida with expansion plans already in place to increase its geographic footprint.  By delivering best-in class horticultural and business practices, a highly skilled workforce, value-added pricing strategy and the scales of scope and efficiency, the Yellowstone Landscape Group provides its customers with a premium comprehensive service offering.

Now that we seem to have passed through the worst of the recession of the last two years, we believe there are some key trends to look for over the next year.

In this article, we will go on the line and make some predictions for 2010.   In our view, these are some of the key trends that will impact green industry mergers and acquisitions in 2010:

Strong players will move to take advantage of growth opportunities

This trend began in the latter part of 2009.  Many industry players expressed an interest in pursuing acquisitions during 2009.  Their efforts in this direction were limited by the lack of available quality sellers and limited access to financing.  Both of these limitations are becoming less significant as we move into 2010, so we expect strong industry players to aggressively seek out high quality opportunities.

Weaker industry players will seek exit opportunities

There will be a number of weaker industry players who delayed action in 2009, expecting (or hoping) for a quick turnaround, who will explore opportunities to sell or combine with stronger companies.

Sellers who deferred action in 2009 will make moves in 2010

Our theory is that many transactions are motivated by “life events” instead of  industry or economy-wide conditions.  Such life events include illness, death, divorce, retirement, etc.  Transactions resulting from “life events” can be deferred but not avoided entirely.  Many potential transactions of this kind were deferred in 2009 due to market conditions, but will be pursued in 2010, creating a potential “bubble” of available transactions.

New consolidation efforts will emerge

Rumors abounded in 2009 of private-equity backed consolidation efforts emerging in various sectors of the green industry.  At least some of these potential projects will likely emerge in 2010.

Government policies will encourage transactions

The Obama administration will continue to support initiatives to help small business, especially Small Business Administration loan programs.  However, there will be continued uncertainty on immigration reform, exasperating many green industry employers and causing some to throw in the towel.

Scheduled capital gains tax rate increases will motivate many sellers

Long-term capital gains rates for many taxpayers are scheduled to increase from 15% to 20% on January 1, 2010.  While there will likely be efforts to either eliminate or delay the increase, the specter of the federal deficit will make such efforts less likely to be successful.  As a result, many potential sellers considering a sale in 2010 or 2011 will seriously consider accelerating  potential transactions into 2010.

The focus on all things green will continue to create opportunities

The green industry naturally gets a boost from the trend toward green practices by both businesses and consumers.  Green industry firms that cater to businesses and individuals who are “going green” will become increasingly attractive buyers and sellers.

2009 was definitely a down year for mergers & acquisitions within the green industry – and for just about every other industry as well.  The twin specters of economic uncertainty and an often extremely challenging credit market caused the number of transactions to fall both out of necessity and out of caution.

That being said, many transactions did get completed.  In this article, we will recap many of the transactions that did take place as we try to make sense of what to expect in the coming year.

January

Yellowstone Landscape Group and its private equity sponsor, Gridiron Capital, announced their third platform acquisition, Austin Outdoor, based in Bunnell, Florida, with a number of other offices in Florida, plus the Bahamas.

The assets of Hines Horticultural were acquired by Black Diamond Capital Management, LLC.  Hines had filed for bankruptcy protection in August 2008.  The business is now known as Hines Nurseries, LLC.   Hines is one of the largest commercial nursery operators in North America, operating seven nurseries in four states.

February

March

Bartlett Tree Experts announced the acquisition of Empire Tree and Turf in Augusta, Georgia, and Top Notch Treecare in Plymouth, Minnesota.

April

Mission Landscape of Tustin, California, acquired Landarcwest, a landscape architecture firm based in Irvine, California.

San Jose-based Jensen Corporate Holdings, Inc. acquired Huppe Landscape Company, Inc. of Roseville, California.

Arizona-based Pathway Landscape, a landscape architecture firm, announced what it called a strategic partnership with Paradise Full Service Landscaping of Scottsdale, a full-service landscape maintenance business.  The combined company, operating under the name Pathway Landscape Maintenance & Design, serves Scottsdale, Tempe, Phoenix and nearly every other city in the Valley of the Sun.

May

Denver-based American Civil Constructors sold its landscape maintenance unit, ACC Landscape Services, LLC to Progress Equity Partners.  ACC Landscape Services operations are in Colorado and Northern California.

July

Noblesville, Indiana-based Custom Touch Irrigation acquired Indianapolis-based Perfect Property Services.

The Brickman Group announced it had “formed a partnership” with Pontiac, Michigan-based Torre & Brugglio.

August

Brighton Partners, LLC acquired a 70% interest in New England lawn care company, Lawn Dawg, Inc., in a recapitalization.  Lawn Dawg has operations in Nashua, New Hampshire, Boston, Massachusetts, Albany, New York, and Portland, Maine.  Lawn Dawg’s president, Jim Campanella,  continues in that role and as a major shareholder.  In announcing the recapitalization, Campanella, an industry veteran and former president of the Professional Lawn Care Association of America, also announced plans to launch an acquisition program.

Austin Outdoor, LLC, a unit of Gridiron Capital-backed Yellowstone Landscape Group, acquired Dolphin Landscape of West Palm Beach, with operations serving Martin, Palm Beach and St. Lucie Counties in Florida.

Sav-A-Tree announced the acquisition of H.R. Spooner Ornamental Care of East Falmouth, Massachusetts on Cape Cod.

October

The Brickman Group announced the acquisition of D. Foley Landscape, Inc. of Walpole, Massachusetts.

Also in October,  two Atlanta-area lawn care businesses, Crabapple Turf Management, Inc. and Unlimited Landscaping and Turf Management, Inc., merged their residential lawn care businesses.

December

Massey Services, Inc. completed the acquisition of Sunair Services, Inc. and its Middleton Pest Control subsidiary.  The merger, the final chapter in a well-publicized take-over battle, combined cross-town, Orlando-area rivals and formed a very strong statewide network in the key state of Florida.

Other

In May, Lawn and Landscape quoted newly-named TruGreen Lawncare president Steven Donly as saying, “Strategic acquisitions have always been a fundamental component of TruGreen’s growth strategy. We believe we can bring owners a compelling business case for growth and create a winning combination for customers looking for outstanding service from a brand they can trust.”  TruGreen does not normally announce individual acquisitions, but in August it announced the acquisition of Nutri-Turf in Michigan and Easy Chair Lawn Care in Ohio.

An analysis of the public filings of The ServiceMaster Company, TruGreen’s parent company, suggest that TruGreen completed acquisitions totaling approximnately $15  million during the first nine months of 2009, compared to approximately $20   million during the first nine months of 2008.   Two major acquirors in years past, Scott’s Lawn Service, a unit of The Scott’s Miracle-Gro Company and The ValleyCrest Companies reported no acquisition activity during the year.