Denver, CO. – Swingle Lawn, Tree & Landscape Care, now celebrating 63 years in business, today announced their acquisition of Tropic Green Lawn & Tree Care customers to strengthen their brand and market position along Colorado’s Front Range communities from Castle Rock to Fort Collins.

Bob and Robert Siebers, former owners of Tropic Green, said “We worked very hard on our search for a Colorado based company with exceptional customer service and the expertise you have come to expect to take over our valued customers’ care. After carefully considering several options, we are excited to announce that Swingle Lawn, Tree & Landscape Care will be replacing Tropic Green in handling your lawn, tree and landscape care needs. Swingle’s recognition over the past 63 years for receiving many industry and business ethics awards was a key factor in our selection process. Swingle also offers an expanded service line that will allow our former customers to use a single point of contact for a landscape care and holiday décor services provider.”

Since 2005, Swingle has acquired ten other landscape care and holiday décor companies expanding their legendary services to all Front Range communities. These acquisitions along with their newest acquisition of Tropic Green will all be supported by Swingle’s branches located in Denver and Fort Collins. All of Swingle’s acquisitions have proved to integrate successfully into the Swingle philosophy of outstanding customer care and service.

“We will focus on retaining Tropic Green’s existing customer base and develop new customer loyalty by offering a host of new services supported by a highly trained team of landscape care experts, holiday décor experts and Swingle’s Customer Care Representatives. We look forward to servicing even more Colorado communities as we grow and develop the Swingle brand in these new market segments along Colorado’s Front Range communities”, said Thomas R. Tolkacz, CEO of Swingle.

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Until recently, it has seemed a forgone conclusion that the Bush-era tax cuts, set to expire at December 31, 2009, would in fact expire.  Of course, those “tax cuts” included the reduction in the capital gains rate from 20% to 15%.
This is a complicated political issue indeed, especially since letting those tax cuts expire was a specific campaign commitment of President Obama.  Bush tax cuts became something of a dirty word during the past campaign.
Political realities have set in.  People have begun to recognize that “letting tax cuts expire” means the same thing as “a tax increase.”  Economists and others have questioned whether now, with a clearly weak recovery in progress, is a logical time to have a tax increase at all.  In addition, Democratic control of both the U.S. House and Senate is far weaker than most observers had expected.  As a result, it looks like debate on at least a temporary extension of the tax cuts may begin before the midterm elections.  A number of Democratic leaders are arguing for at least a partial extension.
It is impossible to predict the likely outcome of this process.  This leaves business owners that were contemplating making decisions based on the timing of the capital gains tax increase (oh, I mean the expiration of the Bush capital gains tax cut) in a tough place.
That being said, given the ballooning federal deficit, it seems unlikely that tax increases won’t be on the horizon, even if an extension is passed this year, so a decision made based on the expectation of tax increases is probably safe, but they may or may not come at the beginning of 2011.
Making a decision based solely on anticipated tax changes isn’t how most people make decisions on the sale of a business, but it is certainly an important factor to consider.

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A good friend of mine is fond of saying that there is a buyer out there somewhere for any business out there – you just have to find them.  While there is a degree of truth to that statement, it doesn’t tell the whole story.  It is estimated that less than 20% of businesses that are listed for sale actually sell.

Over the past couple of years, many businesses have not sold and many would blame a combination of general economic conditions and a lack of financing.  There  is a lot of truth to that explanation.  However, many businesses actually have sold during that period.  Many others haven’t.

This article explores some of the reasons that businesses don’t sell.

A lack of information about the business is often a major issue keeping a business from being sold.  Financial statements and tax returns may be incomplete, erroneous or late.  Many businesses prepare financial statements primarily in connection with filing tax returns that may be extended to nearly nine months after the end of the year.  If a buyer is considering an acquisition, they will almost always lose interest if financial information is not forthcoming in a timely manner.  If the financial statements do not break out the elements of the business in a way that is understandable to the buyer and there questions cannot be addressed, it is likely they will either pass on the business completely or make a low-ball offer.  Fort example, I have had clients in the green industry that had design/build revenues, maintenance revenues and garden center sales all on one line in their financial statements.  They could describe how much of the business was represented by these sources, but they couldn’t back it up with records.  It is also common for business sellers to begin to talk about their “cash” business in the belief that they can enhance the value of their business.  I once even heard a business owner tell a potential buyer that he could prove his cash business by literally “showing him the money.”  Not only will a business buyer discount such assertions, they are likely to be completely turned off.

Cash flow is the driving force behind business acquisitions.  Potential buyers evaluate an acquisition on the basis of the cash flows they can generate from the business. If a business does not demonstrate adequate cash flow, it is unlikely to be sold as an ongoing business.  It may, in some cases, be able to sell  a business on potential, but this is difficult and often results in low prices, partly because such acquisitions cannot be financed.  Otherwise, the business can only be valued based on its hard assets.

Buyers will also be concerned with the quality of the revenues and cash flows being generated by the business.  How dependable are those revenues?  How likely are customers to remain after an acquisition?  Is revenue recurring or will the buyer have to resell customers?  Do most of the seller’s revenues come from only a handful of customers?

If a business is overpriced, it may not sell at any price.  Buyers will be reluctant to enter into discussions with a seller who is asking a much higher price than the buyer would be willing to pay in the belief he may be wasting his time or insulting the seller.  They will usually just move on to another opportunity.  It is natural for a business owner to want to get the best possible price for his business.  It is best to get an expert opinion from someone who will tell you the truth – not just what you want to hear.  In the green industry, many business owners hear stories at the multiple of revenues that businesses sell for.  They believe that if a competitor got 85% of revenue as a sale price, then surely they should get at least that much.  The real basis of pricing is usually the cash flow of the business, or at least the cash flow that the buyer will be able to generate from the business.  You can only really compare pricing based on revenue if the margins or potential margins of the business are similar.

Some businesses will not sell because the seller is not motivated or flexible in dealing with a potential buyer.  They may want to sell, but only if they are able to receive their own unrealistic perception of the value of the business.  They may be unwilling to consider such features as offering some seller financing.  All other things being equal, a buyer will be attracted to a motivated seller.

Location is also a factor in whether many businesses will sell.  Many businesses are not easily relocatable without an impact on the customer base.  If a location is undesirable or there is no certainty that the location can be retained because the lease is short or may not be assumable, the business may not sell.

Poorly selected advisors are another reason that businesses don’t sell.  To make a sale more likely, sellers should look for advisors, including attorneys, accountants, brokers and others, that are deal makers, not deal breakers.  Deal breakers may try to renegotiate aspects of a potential transaction that the seller has already agreed to.  This creates discomfort with a buyer – do they have a deal or not?  It slows down the deal and runs up everyone’s fees.  This usually happens with the best of intentions, protecting the interests of their clients, but often has exactly the opposite impact, making a deal that was within reach impossible to complete.

Poor market exposure is another common reason businesses don’t sell.  Any business broker can post an internet listing for a business listing, but what else do they do?  Can they identify, target and contact buyers who would be interested in the particular business being sold or do they just list it and wait for something to happen?  Many businesses do not sell because the people who would be interested never hear about it.  This is an extremely complicated topic because of the confidentiality concerns that most business sellers have, but it is crucial, because the more qualified buyers who know about the  opportunity, the more likely the business is to sell and at a good price.

Sometimes, businesses do not sell because there just really isn’t anything there to sell.  That can happen when a business owner waits too long to make a move.  It can also happen when the business may be totally dependent on the identity and personal services of the owner.  On the other hand, it can also happen when the business is totally dependent on employees who are really not tied to the business.

There is no silver bullet, but it is worth asking what factors make it more likely a business will sell.  Here are some:

• A sustained track record of quality revenues, profitability and cash flows.
• Good quality, timely financial and other records.
• A good location, well-maintained.
• High quality customer relationships tied to the ongoing business, not just its owner.
• Informed, reasonable, motivated, and flexible sellers.
• Professional advisors who know how to make deals work.

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From the Denver Business Journal

See you in September — that’s the message Congress sent to small businesses looking for help in getting loans.

Before leaving Washington for its August recess, Congress failed to complete action on legislation that would make Small Business Administration loans more available and provide community banks with up to $30 billion in cheap capital for use in making small business loans.

Chances of the Small Business Jobs Act being enacted before September ended when the Senate failed to resolve a procedural dispute on the legislation before the House recessed July 30.

This means SBA lenders will go at least another month without a 90 percent government guarantee on the agency’s flagship 7(a) loans. That enhancement, an increase from the typical 75 percent guarantee, was created by the economic stimulus bill and expired June 1. The higher guarantee made SBA loans less risky for lenders.

Fee waivers on 7(a) loans and the SBA’s 504 loans, which are used primarily to finance real estate, also expired June 1. These breaks made the loans more affordable for small businesses.

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ATLANTA, Ga. – Atlanta-based Arrow Exterminators announces the acquisition of Top Notch Pest Control of Tampa, located on the Gulf Coast of Florida.

Top Notch is a full service company, specializing in residential and commercial pest control, termite control, and lawn and ornamental services. This is Arrow’s 95th acquisition since 1988.

Company owners Michael and Mary Carli have over 35 years combined experience in the pest control industry.  The family values and similar culture were the main reason Top Notch owners were interested in a merger with Arrow Exterminators.

“At Top Notch Pest Control, we are passionate about our customers and the service we provide them.  We are passionate about our employees.  We feel that with this merger with Arrow, we are in the right ‘home,’ ” said Michael Carli. “We know our employees and customers will be well taken care of and that was really important to us.”

“We are really quite pleased to add to our already strong business in the Tampa Bay area,” said Joe Thomas, chairman of the board of Arrow Exterminators. “Their large base of business in St. Pete and Clearwater clearly complements our business in Tampa.”

“Top Notch Pest Control is an extremely well regarded company in the Tampa Bay area. We are proud to have this seasoned team of professionals join the Arrow family.  We are continuously looking for acquisition partners who will complement our objectives and principles,” said Emily Thomas Kendrick, chief executive officer and president.

Kendrick added, “Top Notch Pest Control aligns perfectly with our growth strategies and family values. Mary and Michael Carli and all the employees of Top Notch Pest Control will remain with the company.”

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The Bush era capital gains tax reduction expires December 31, 2010.  The top capital gains tax rates will rise from 15% to 20%.  Any relief from this tax increase seems highly unlikely anytime soon given the federal deficit and political trends.

In addition, the health care reform bill made some tax changes tat will also affect business sellers, beginning in 2013.  First, the act increased federal income tax rates for individuals earning over $200,000 and couple earning over $250,000 by .9%.    The act also provides for a new tax on investment income above those same levels of 3.8%.  The proceeds of a business sale would be considered investment income, so the effective capital gains tax rate will be 23.8% – for federal income tax purposes only.

When these two rounds of tax increases are in place, a business seller  with a capital gain of $2,000,000 from the sale of his or her business will pay $476,000 in federal income taxes, an increase of $176,000 from the tax levels in place in 2009.   Of course, state income taxes will be applicable for many business sellers as well.

Potential business sellers are well-advised to consult with their tax advisers to evaluate the potential impact of these pending tax changes on their personal tax situations.  For some, it may not be too late to consummate a sale by year-end.  Others may wish to plan a sale prior to the next round of tax increases.

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Gridiron Capital, LLC announced the acquisition of Forest Hills Lawn Service, Inc. (Forest Hills) by its portfolio company, Yellowstone Landscape Group, Inc. (Yellowstone) on July 13, 2010. Based in Dallas, TX, Forest Hills provides landscape maintenance services primarily focused on municipal and governmental accounts. Forest Hills will become part of BIO Landscape & Maintenance, Inc. (BIO), a wholly-owned subsidiary of Yellowstone.

With the acquisition of Forest Hills, BIO now serves 21 counties with a combined workforce of over 500 professionals throughout Texas. The transaction marks the third addition to BIO over the last year. In October of 2009, BIO acquired Outdoor Environments, LLC, a Houston based commercial landscape maintenance company. In December of 2009, BIO acquired Texas Services, Ltd., a sustainable tree care focused lawn maintenance and landscape company in Houston. In May of 2010, BIO officially opened a maintenance branch in Beaumont and today operates multiple branches throughout the state of Texas.

Robert Taylor, President of BIO, commented, “BIO’s geographic footprint in Texas continues to grow rapidly. We felt that the next strategic branch for BIO should be in Northeast Texas. BIO’s maintenance division has been hard at work winning prestigious accounts in the Dallas area, so when we learned of the acquisition opportunity we knew it was a good fit. With the Forest Hills acquisition, BIO gains valuable employees, a state of the art facility, and an equipment repair dealership business which allows BIO to bring additional value to customers.”

Owen Tharrington, a Principal of Gridiron Capital, commented, “The acquisition of Forest Hills is consistent with our initiatives of strategically acquiring companies that can strengthen Yellowstone and provide significant growth opportunities. During a challenging economy, Yellowstone has continued to invest in its customer sales efforts and breadth of capabilities while expanding its geographic presence. This acquisition represents Yellowstone’s fifth successful add-on acquisition since inception and marks a significant strategic expansion for BIO in the Dallas, Texas marketplace.”

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, HOA and estate markets. Yellowstone offers a comprehensive landscape service solution of green and sustainable practices with an emphasis on protecting, enhancing and increasing property values. Services include landscape maintenance, landscape installation, irrigation installation and maintenance, arbor care, athletic field construction, and colorscaping. Yellowstone currently serves customers in Texas, South Carolina, Georgia, Florida and the Bahamas with plans for substantial geographic expansion. 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.

Yellowstone currently oversees three major operating subsidiaries: Austin Outdoor based in Florida, BIO Landscape & Maintenance, Inc. based in Texas, and Piedmont Landscape based in Georgia, making it the seventh largest full-service commercial landscape group in the United States. Visit www.yellowstonelandscape.com for more information.

About Gridiron Capital:

Gridiron Capital, LLC, headquartered in New Canaan, Connecticut, is a private equity firm focused on creating value by acquiring and building middle-market manufacturing, service and specialty consumer companies in the United States and Canada. The firm’s principals have historically achieved superior investment returns by employing a combination of strategic, operating and financial experience to provide portfolio companies with competitive advantages. Gridiron’s principals work closely with management teams to develop strategies for portfolio companies, as well as providing resources to execute business plans and build industry-leading companies. Additional information about Gridiron is available on the firm’s website at www.gridironcapital.com.

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BizBuySell has released its second quarter 2010 Insight Report reflecting increased business succession activity.

According to the report, the number of closed transactions in the second quarter rose significantly, 6.3 percent, as compared with the same time period in 2009 — from 1,040 transactions to 1,106.The market is continuing to improve, making it a good time to list a business for sale. “It’s encouraging to see ongoing recovery in the business-for-sale marketplace,” commented Mike Handelsman, general manager of BizBuySell.com. “The market is continuing to improve, making it a good time to list a business for sale.”While transaction volume is up in comparison to 2009, the market remains down compared to prior years. In Second Quarter 2008, business brokers reported 2,098 closed transactions. Relative to two years ago, the market is still down 47% versus its peak.Business Valuation Multiples Rise in Second Quarter 2010In addition to an increase in completed deals, the report notes slight changes in the metrics that are used to value companies. Compared to the same quarter last year, revenue multiples declined while cash flow multiples increased, suggesting that sellers with cash flow positive businesses may be seeing more qualified buyers bidding to buy companies. This puts upward pressure on business sale prices, which is reflected in the higher cash flow multiples. Sellers are clearly valuing cash flow more than revenue, as evidenced by the decline in revenue multiples.Specifically, revenue multiples on reported closed transactions in Second Quarter 2010 declined from 0.68 to 0.66 compared against Q209, representing a 2.3% decrease. In contrast, cash flow multiples increased nicely from Second Quarter 2009′s 2.59 to Second Quarter 2010′s 2.81, representing an 8.5% increase. The revenue and cash flow multiples are calculated by dividing the selling price of the business by its reported annual revenue or cash flow.

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ATLANTA, July 13 /PRNewswire-FirstCall/ — Rollins, Inc. (NYSE: ROL) a premier international consumer and commercial services company, today announced that it has signed a definitive agreement to acquire Waltham Services, Inc.  The acquisition is expected to close by the end of July 2010.

Waltham Services, Inc. was established in 1893 in Waltham, Massachusetts. Waltham Services with annual revenues exceeding $17 million is a leading provider of advanced pest management, serving New England and New York. Waltham’s primary service is commercial and residential pest control. Following the acquisition, Waltham will operate independently to preserve its successful brand and loyal customers.  Prior to the acquisition, Waltham was ranked as the 33rd largest company in the industry.

Glen Rollins, Executive Vice President of Rollins, Inc. and President of Orkin, LLC commented, “We are most pleased to welcome Waltham Services to the Rollins family of leading pest control brands.  They have an outstanding management team and the company has, in fact, worked with Western Pest Services for over 40 years. This week, along with Waltham’s leadership, I will visit with their team and personally meet many of the fine individuals who are contributing to the company’s success. We feel fortunate to be joining with the oldest and finest pest control company in New England, whose talented associates will greatly enhance our service network.”

Rollins also recently announced that its Orkin subsidiary had acquired Redi-National Pest Eliminators of Tyler, Texas, which will be integrated into Orkin’s Tyler branch.

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There is a good article in the June issue of Pest Control Technology on the acquisition of Middleton Pest Control by Massey Services of  Florida.  In the article, Massey CEO Harvey Massey is quoted extensively, with a special focus on the integration process, which was the result of careful planning which resulted in a 25-page integration plan. “The whole integration plan has gone along better, smoother, and faster than anyone anticipated,” Harvey said, “and we haven’t had to lay off one person. We’ve been blessed.”

Interestingly, a Massey spokesman is quoted as saying “All of our acquisitions have been opportunistic as opposed to strategic in nature.”

Here’s a link to the full article.

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