Here are our thoughts about key trends that will impact green industry mergers and acquisitions in the year to come:
· Major industry players will continue to seek strategic acquisitions in an attempt to strengthen their networks.
· Local and regional companies will also seek to take advantage of strategic acquisition opportunities.
· A number of regional consolidation efforts will emerge as companies seek to take advantage of opportunities and strengthen their position in their position in an increasingly competitive marketplace.
· Franchising and similar programs will to continue to grow in the industry, giving independent operators access to marketing and operational support and reducing risks.
· Financing will continue to be a challenge for many potential buyers.
· Buyers will be disciplined in their approach to acquisitions, partly in response to the requirements of their financing sources.
· Long-term tax policy for capital gains and estate taxes will continue to be uncertain, making exit planning challenging.
· Additional consolidation efforts in both lawn care and landscape services will emerge.
· Although the economy is slowly emerging from the recession, the effects of price competition will impact the profitability of the industry, prolonging the recovery for many. The combination of the recession and serious competition will cause weaker companies to seek exit strategies.
· Valuations will remain soft and will not return to pre-recession levels for some time to come. The best opportunities will still command premium valuations.
· Over time, landscape contractors who shifted their focus to maintenance as construction ground to a halt will return to their traditional business.
· As the economy strengthens, the focus on all things green will become even more pronounced. Environmentally-friendly businesses within the industry will be increasingly attractive, including those offering organic lawn care and water-efficient landscaping.