Merit Service Solutions
Eureka Growth Capital has acquired  the assets of Merit Service Solutions Holdings LLC, a provider of facility maintenance services with seven company locations and a nationwide network of contracted service providers.  Merit provides a variety of facilities services including snow removal, parking lot maintenance, and landscape services.

PRESS RELEASE

PHILADELPHIA, PA, November 30, 2016 – Eureka Growth Capital (“Eureka”) today announced the acquisition of the assets of Merit Service Solutions Holdings, LLC through its newly-formed affiliate, Exterior Maintenance Resources, Inc. (“Merit” or the “Company”). Eureka recruited a new CEO and partnered with operating management to establish a platform that is a leading Eureka Grothnational provider of outsourced exterior facilities management services.
Headquartered in Malvern, PA, Merit leverages seven Company locations and a nationwide network of thousands of service providers to provide essential facility maintenance services to a diverse customer base including national retailers, commercial property managers, multi-family housing developers, government-owned properties and other institutional customers.

“We are very excited to work with new CEO Joe Giandonato and the talented members of existing operating management, including COO Joe Hoey and CFO Steve Rudd,” stated Chris Hanssens, Managing Partner of Eureka who, along with Eureka Vice President Lisa Harris Millhauser, joined the Board of the Company at the close of the transaction. “We look forward to the opportunity to help Merit realize the growth potential that exists within Merit’s national network of quality service providers, its dedicated team supporting its service provider network through Company locations in several key regions throughout the United States, and its longstanding commitment to be an ideal outsourced services partner to its customers that put tremendous importance on maintaining the facilities that are the most tangible representation of the value they endeavor to bring to their customers.”

“Eureka is the perfect partner for Merit Service Solutions given their operational focus and commitment demonstrated throughout the diligence process to bring the resources and leadership to support our vision, team and future growth,” stated Merit CEO Joe Giandonato. “Eureka brings significant experience and a track record of success within our outsourced business services vertical and shares our team’s strategic vision of becoming the leading provider of highest-quality exterior facility maintenance services to valued customers nationwide. I look forward to working with Eureka and our team at Merit in executing on this vision.”

M&T Bank provided debt financing to support the acquisition.

About Eureka Growth Capital
Eureka Growth Capital is a private equity firm targeting niche market leaders with up to $75 million in revenue. Eureka focuses on partnering with proven managers to drive the growth of promising companies into outstanding enterprises. Eureka leads buyouts that bring significant ownership to the operators driving the success of the business and minority recapitalizations with flexible investment structures designed to uniquely meet the needs of the company, its management team and other shareholders. More information about Eureka Growth Capital can be found by visiting www.eurekagrowth.com.

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pie-chart_g1ttvilo_lMarket share is usually a worthy goal, but sometimes the markets you haven’t penetrated may be a a major driver in the value of your business.  This because the outlook for growth is major factor business buyers are typically looking for in an acquisition.  In a landscape business, for example, expanding yourb tqarget markets geographically nor demographically may help make the case for growth potential.

Imagine you’re a farmer and you’ve been tending to your crops all year. It’s harvest season and finally time to collect the spoils of your labor.

You start harvesting your crops only to find out that pesky rodents have been quietly eating away at your fields. You’re devastated as you come to the realization that much of what you have been working so hard to cultivate has already been taken.

Feeling like there is not much field left to harvest is what acquirers and investors are trying to avoid as they evaluate buying your business. Metaphorically speaking, acquirers want to know that if they buy your business, there will be plenty of fresh farmland left for them to till.

Addressable Market

Investors call it your company’s “addressable market” and it is one of the main factors buyers will look at when they evaluate the potential of acquiring your company.

Business 101 tells us we should strive for market share so we can control pricing. Market share is a worthy goal if your objective is to maximize your profits. However, if your primary objective is to increase the value of your company, you want to be able to communicate that you have relatively low market share across the entire addressable market. In other words, there is plenty of field left to plough.

Consider the following ways you might expand the way you are currently thinking about the addressable market for what you sell:

Demographics

Demographics involve segmenting a market by objective measures like gender, income, age and education level. Marriott is a hotel chain but they have created a variety of brands to address the various demographic segments they want to serve. Ritz Carlton is a Marriott brand that appeals to well-heeled travellers, but if all you want is a basic room, you could opt for a Courtyard Marriott. It’s the same company, but they have expanded their addressable market by focusing on different demographic segments.

Psychographics

Psychographics involve segmenting your market according to the way people think. Toyota produces the Prius, which gets 50 miles per gallon and is a favourite among environmentalists. Toyota also produces the thirsty Tundra pickup truck and, at just 15 miles per gallon, attracts a different psychographic segment.

Geography

Success in your local market is good but if you want to really boost the value of your company in the eyes of an acquirer, you need to demonstrate that your concept crosses geographic lines. McDonald’s has more than fourteen thousand locations in the United States but they have also demonstrated that the golden arches can draw a crowd in other markets. McDonald’s has nearly three thousand stores in Japan, two thousand in China and more than a thousand locations in each of the European countries of Germany, Canada, France and the United Kingdom.

You don’t actually have to become a global giant like Marriott, Toyota or McDonald’s to increase your company’s value but you do need to be able to communicate that your concept could work in other markets and that there is still good land left to plough.

The post Market Share vs. Addressable Market – Focusing on Growth Potential Can Help Drive Value appeared first on Principium Group: Mergers & Acquisitions.

Can you imagine your landscape business running without you?  If you can’t, it’s likely no one else can either, including a potential business buyer.

Business Works Without YouIt really can be done.  Jeffrey Scott, the landscape industry consultant, coach and peer group facilitator, tells of a client who spends most of the year in Europe and checks on his business only occasionally.  Can you imagine your business working like that?:

Some owners focus on growing their profits, while others are obsessed with sales goals. Have you ever considered making it your primary goal to set up your business so that it can thrive and grow without you?

A business not dependent on its owner is the ultimate asset to own. It allows you complete control over your time so that you can choose the projects you get involved in and the vacations you take. When it comes to getting out, a business independent of its owner is worth a lot more than an owner-dependent company.

Here are five ways to set up your business so that it can succeed without you.

1. Give Them A Stake In The Outcome

Jack Stack, the author of The Great Game of Business and A Stake In The Outcome wrote the book on creating an ownership culture inside your company: you are transparent about your financial results and you allow employees to participate in your financial success. This results in employees who act like owners when you’re not around.

2. Get Them To Walk In Your Shoes

If you’re not quite comfortable opening up the books to your employees, consider a simple management technique where you respond to every question your staff bring you with the same answer, “If you owned the company, what would you do?” By forcing your employees to walk in your shoes, you get them thinking about their question as you would and it builds the habit of starting to think like an owner. Pretty soon, employees are able to solve their own problems.

3. Vet Your Offerings

Identify the products and services which require your personal involvement in either making, delivering or selling them. Make a list of everything you sell and score each on a scale of 0 to 10 on how easy they are to teach an employee to handle. Assign a 10 to offerings that are easy to teach employees and give a lower score to anything that requires your personal attention. Commit to stopping to sell the lowest scoring product or service on your list. Repeat this exercise every quarter.

4. Create Automatic Customers

Are you the company’s best salesperson? If so, you’ll need to fire yourself as your company’s rainmaker in order to get it to run without you. One way to do this is to create a recurring revenue business model where customers buy from you automatically. Consider creating a service contract with your customers that offers to fulfill one of their ongoing needs on a regular basis.

5. Write An Instruction Manual For Your Business

Finally, make sure your company comes with instructions included. Write an employee manual or what MBA-types called Standard Operating Procedures (SOPs). These are a set of rules employees can follow for repetitive tasks in your company. This will ensure employees have a rulebook they can follow when you’re not around, and, when an employee leaves, you can quickly swap them out with a replacement to take on duties of the job.

You-proofing your business has enormous benefits. It will allow you to create a company and have a life. Your business will be free to scale up because it is no longer dependent on you, its bottleneck. Best of all, it will be worth a lot more to a buyer whenever you are ready to sell.

The post Five Ways to Get Your Business to Run Without You appeared first on Principium Group: Mergers & Acquisitions.

Columbua LandcareColumbia Landcare, a commercial landscape services company located in Columbia, Missouri, has acquired Creative Surroundings, Inc., another Columbia Landscape services company.

Columbia Landcare was formed n 2009 as a result of the merger of Missouri Mowing and Columbia Turf.  It is owned by Jed Taylor who serves as CEO.  With the new acquisition, Columbia Landcare expects to approach $6 million in revenues in 2017.  In addition to commercial grounds maintenance, the company provides irrigation installation and service and snow removal.

10612856_902860539778442_7243986444617913524_nCreative Surroundings was founded in 1982 by Gloria Gaus.  Gaus will be a part of the Columbia Landcare team for the next twelve months during the transition.

Read more in the Columbia Daily Tribune.

The post Columbia Landcare Acquires Creative Surroundings in Columbia, Missouri appeared first on Principium Group: Mergers & Acquisitions.

How much goodwill do you have in your business?

The term “goodwill” is often thrown around in conversation as though it is a subjective description of how much your customers like your business.

In fact, when it comes to valuing your business, there is nothing subjective about the definition of goodwill. It is defined as the difference between what someone is willing to pay for your company minus the value of your hard assets.

Let’s imagine you own a plumbing company and the main physical assets in your company are the five vans you own and some tools with a total value of around $100,000. If you sold your plumbing company for $1,000,000, the acquirer would have paid $900,000 in goodwill ($1,000,000 – $100,000).

When a company sells for the value of its fixed assets, it is often a distressed business one step away from closing down. One way to think about your job description as an owner is to maximize the difference between what your business is worth to a buyer and the value of your fixed assets.

Marriott buys more than bricks and mortar

For an example of the difference between valuing a business for its hard assets vs. its goodwill, take a look at the recent acquisition of Starwood Hotels & Resorts Worldwide by Marriott. Neither Starwood nor Marriott own many of the hotels that bear their name. Instead, they license the name to operators, franchisees and the owners of the bricks and mortar.

So why would Marriott cough up $13 billion for Starwood if they don’t even own the hotels they run? In part, Marriott wanted to get its hands on the Starwood Preferred Guest program, a loyalty scheme which has proven more popular than Marriott’s program for frequent travellers.

Similarly, Uber is worth something north of $50 billion because more than one million people per day hail a ride using Uber, not because they own a whole bunch of cars.

Chasing hard assets at the expense of goodwill

Many owners focus on building their stockpile of hard assets, not understanding the concept of goodwill.

Accumulating hard assets like land and machines and equipment is fine, but the savvy owner, looking to maximize her value, focuses less on the tangible assets and more on what those assets allow her to create for customers. There is nothing wrong with owning hard assets unless they take away from capital you could be investing in creating goodwill. Then the opportunity cost may exceed the value of owning the stuff.

Arguably both Uber and Starwood would be a shadow of the companies they are today had they pursued a strategy of accumulating hard assets. Would Uber ever have made it out of San Francisco if they had to buy a Lincoln Town Car every time they wanted to add a driver to their network?

In your case, focus on what creates value for customers and you will maximize the value of your business far beyond the value of your hard assets.

The post How Much Goodwill Do You Have in Your Business? appeared first on Principium Group: Mergers & Acquisitions.

By Richard Helling

Many volumes have been written about the two presidential candidates over the past few months and as the election grows closer there will undoubtedly be many more volumes written. While there is much to say about both candidates, Donald Trump provides an interesting example of what most small business owners should try to avoid.

trumpI can already hear some of you sharpening your verbal machetes to provide full-throated defenses for or against him becoming president, but I promise this is not that type of article. Let me explain.

Generally speaking, every president (with the exception of Barack Obama, because of the nature of his assets) since Lyndon Johnson in 1963 has placed his assets in a blind trust to avoid even the appearance of impropriety by using the enormous powers of the presidency to gain personal financial advantage. Actually, when you think about it, this makes good sense. I believe we all can agree that a president is supposed to represent the United States and do what is best for the country, not what is best for his bank account.

This is what makes Donald Trump (and to a lesser extent Hillary Clinton) such an interesting case study.

Whether you love him or hate him, Donald Trump is a master at branding and his biggest and most successful brand is himself. As has been noted by countless news organizations, he has “Trump” branded everything from casinos and golf courses to a university, steaks and bottled water. The Trump brands include clothing, publications, TV shows, fragrances, restaurants and, yes, even ice skating rinks.

So what’s the problem? He has generally done quite well for himself with his branding ability.

The trouble arises for him when he has to remove the most important piece of his brand from the brand itself. And clearly the most important part of his brand is the man himself. No doubt, he has countless talented individuals working for him and I’m sure they are excellent at their jobs. But people are not buying Trump products because of highly skilled workers in a high rise building in Manhattan. They are buying these products because they believe in the Trump brand and the success that they believe it represents.

So the question is this: Can the brand stay strong if the man who is the brand is no longer in control of the business that bears his name? The answer, of course, will only become completely apparent if and when he is elected president. Should that happen, it will certainly be interesting to see how he untangles himself from any conflicts of interest that could arise if he is elected president.

While this question of untangling potential presidential conflicts of interests is an interesting mental exercise, it also has serious implications for small business owners as well. Given the scenario presented above, small business owners should absolutely consider whether their brand is tied directly to their name and personal relationships with clients, or if the reputation or brand of the business is independent of any one person and can continue with any competent leader at the helm.

As with many nuanced situations, the answer is probably “A little bit of both.” It is unlikely that a person who has built any successful business has done so without having a strong reputation that has been developed and hard-won through years of professionalism and hard work. No doubt many of your clients know you personally and they know that if you give your word, the job is taken care of and they don’t have to worry about it. This is how many successful businesses have been built. However, this type of structure begs a question that many business owners do not fully appreciate and it is this: “If you wanted or had to sell your business tomorrow, would someone buy it? How much is your business worth without you? Have you built a brand that revolves almost entirely around you and your personal reputation?”

These are difficult questions and unfortunately there are no simple answers. However, like most difficult or complex situations, there are strategies that can be implemented that can help mitigate some of the pitfalls and allow you to not be boxed in by what has made your business most valuable.

We would welcome a chance to discuss these complex issues with you and we promise not to discuss politics!

The post Have You “Trumped” Your Business appeared first on Principium Group: Mergers & Acquisitions.

Are you stuck trying to figure out how to create some recurring revenue for your business?

You know those automatic sales will make your business more valuable and predictable, but the secret to transforming your company is to think less about what’s in it for you and more about coming up with a reason for customers to agree to a monthly bill.

Take a look at the transformation of Laura Steward’s company, Guardian Angel. Steward had gotten her IT consulting firm up to $400,000 in revenue when she called in a valuation consultant to help her put a price on her business. Steward was disappointed to learn her company was worth less than fifty percent of one year’s sales because she had no recurring revenue and what sales she did have were dependent on her personally.

Steward set about to transform her business into a more valuable company and made three big moves:

  1. Angel Watch

The first thing Steward did was to design a monthly program called Angel Watch, which offered her business clients ongoing protection from technology problems. Steward offered her Angel Watch customers ongoing remote monitoring of their networks, pre-emptive virus protection and staff on call if there was ever a problem.

Steward approached her clients with a calculation of what they had spent with her firm over the most recent 12-month period, including the cost of her customer’s downtime. She made the case that by signing up for Angel Watch, they would save money when taking into consideration both the hard costs of her firm’s time and the soft costs associated with downtime.

90% of her customers switched from hourly billing to the Angel Watch program.

  1. Doubling Rates

Next Steward doubled her personal consulting rates. That way, when one of the customers who decided not to opt into Angel Watch called her firm, they were quoted one rate for a technician’s time or twice the price to have Steward herself. Not surprisingly, most customers opted for the cheaper option and others chose to re-consider their decision not to sign up for Angel Watch.

  1. Survivor Clause

Steward also credits a small legal maneuver for further driving up the value of her business. She included a “survivor clause” in her Angel Watch contracts, which stipulated that the obligations of the agreement would “survive” a change of ownership of her company.

Steward went on to successfully sell her business at a price that was more than four times the original valuation she had received just two years prior to launching Angel Watch.

The post Three Moves Quadrupled the Value of this Business appeared first on Principium Group: Mergers & Acquisitions.

swingle-logoTulsa-based LawnAmerica has merged with Colorado’s Swingle Lawn, Tree and Landscape Care.    This merger c0mbines two large regional lawncare companies with Swingle being ta leader in Colorado and LawnAmerica being a leader in Oklahoma.

Here is the text of the press release announcing the merger:

Denver, Colorado, USA, September 20, 2016 – Swingle Lawn, Tree & Landscape Care, now celebrating 69 years in business, today announced that LawnAmerica has merged with them. The merger results in Swingle Lawn, Tree & Landscape Care owning the majority of the assets of LawnAmerica, an Oklahoma based lawn care business. LawnAmerica has been in business since 1999, employs approximately 60 people and is active in the Tulsa, Oklahoma City and portions of the North Carolina/South Carolina markets. They are leaders in turf care and are also a Christmas Décor franchise.

Brad Johnson, founder and former majority owner of LawnAmerica, said “In order for our business to continue to grow and prosper, we are merging with a larger company out of Denver, Colorado, LawnAmSwingleLawn, Tree & Landscape Care. Swingle has been in business for nearly 70 years, and are well respected in their market and nationally. After lengthy discussions with many industry advisors, I’ve decided Swingle is the best fit for the next steps for LawnAmerica.”

Both companies will continue to operate as independent businesses. Each company remaining committed to providing their respective customers with industry-leading services, while also exploring new ways to combine resources, experience and sharing of best practices to improve efficiencies where possible.

“A twenty-year industry friendship between Brad Johnson and myself has provided the foundation for this excellent opportunity. Combining our businesses provides an opportunity to grow stronger as multi-regional businesses, providing additional opportunities for team members and expanded service offerings to customers. We appreciate the amazing work Brad and his team have done, and together we plan to build on this success”, said Thomas R. Tolkacz, CEO of Swingle and new majority owner of LawnAmerica.

Founded in Denver in 1947, Denver-based Swingle Lawn, Tree and Landscape Care has grown to become the leader in residential and commercial lawn care, tree service, and holiday lighting in the Front Range of Colorado.

 

 

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