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This webinar, hosted by Ron Edmonds of The Principium Group, will cover the following topics:When to Consider Acquisitions
Developing an Acquisition Strategy
How to Identify Acquisition Targets
Negotiation Strategies
Integration Planning
Characteristics of Successful Acquisitions
Mistakes to Avoid in the Acquisition Process
Case Studies of Successful and Unsuccessful Acquisitions
Questions and Answers

Title:	Acquisitions as a Pathway to Growth for Landscape Contractors
Date:	Thursday, May 10, 2012
Time:	11:00 AM – 12:00 PM CDT

Space is limited. Reserve your Webinar seat now at: https://www4.gotomeeting.com/register/555281479

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San Francisco, CA – April 4, 2012 – BizBuySell.com, the Internet’s largest business-for-sale marketplace, reported Wednesday that nearly four percent more businesses were sold in the first quarter of 2012 compared to the same period last year. The results were included in BizBuySell’s First Quarter 2012 Insight Report.

The report, which aggregates business-for-sale transactions reported by participating business brokers nationwide, showed continued improvement in the business-for-sale market. In total, 1,729 closed transactions were reported in the first quarter of 2012, a 3.9 percent increase from Q1 2011.

The 1,729 businesses that were reported sold in the first quarter of 2012 mark the largest number of transactions since the fourth quarter of 2008, making this quarter the most active in over three years. Additionally, the quarter marks the third straight period of increasing business transactions after both Q3 and Q4 of 2011 saw improving conditions.

“Seeing small business transaction totals reach 2008 levels bodes well for the upcoming months,” Mike Handelsman, group general manager of BizBuySell.com and BizQuest.com said. “While we are not out of the woods yet, economic factors are slowly improving and have given the business-for-sale marketplace a nice boost to start 2012.”

Lower Valuations Lead to Lower Prices

A main driver of the increase in transactions is that business owners were willing to accept lower prices than in previous quarters. While total closed transactions increased in Q1 of 2012, average sale price as a multiple of both revenue and cash flow decreased compared with the same period last year. The average sale price as a multiple of annual revenue fell over 10 percent to 0.59, the lowest since the financial crisis at the end of 2008. The average sale price as a multiple of cash flow decreased by 4.7 percent to 2.36.

These falling multiples may point to business owners becoming more realistic about final sale prices. While median asking prices for sold businesses actually increased by $1,000, the median final sale price dropped 3.2 percent, from $155,000 in Q1 2011 to $150,000 in Q1 2012.

“Business owners are continuing to adjust their pricing in order to expedite a sale,” Handelsman said. “While some may still be holding out for an economic recovery, many more are trying to exit at acceptable prices, even if it means settling for a lower number than they originally expected.”

Better Financing Options, Unemployment Create Demand

Throughout the recession, one of the main obstacles for buyers to overcome was financing the transactions. Over the past year, credit market conditions have become more favorable. Banks are lending and more business owners are offering seller financing to prospective buyers. High unemployment rates also continue to create demand as out of work entrepreneurs seek to invest in new businesses.

“Lack of available financing is consistently named as one of the top reasons for a slow recovery by our audience of leading business brokers,” Handelsman said. “As buyers find more ways to fund their business acquisitions, we expect the increase in business transactions to continue.”

Continued Growth Expected for Rest of 2012

While valuation multiples dropped in Q1, median revenue for sold businesses grew from $346,000 to $360,000 compared to the same quarter last year. As these financials continue to improve, owners may finally have the confidence that their business is healthy enough to sell. Also, with many Baby Boomers reaching retirement age, the latent supply held over the past couple years could hit the market in the remainder of 2012.

“There are certainly small business owners who have been biding their time since the recession hit in 2008,” Handelsman said. “With better financing available for buyers and a larger supply of businesses ready to hit the market, we may finally have the right conditions for a more significant bump in the number of closed transactions.

About the BizBuySell.com Insight Report

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.

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Acquisitions:  A Pathway to Growth for Landscape Contractors

This one-hour webinar led by Ron Edmonds of The Principium Group will cover the following topics:
When to Consider Acquisitions
Developing an Acquisition Strategy
How to Identify Acquisition Targets
Negotiation Strategies
Integration Planning
Characteristics of Successful Acquisitions
Mistakes to Avoid in the Acquisition Process
Case Studies of Successful and Unsuccessful Acquisitions
Questions and Answers
Date:  Thursday, May 10, 2012
Time:  12:00 noon EDT, 11:00 am CDT
Register here:  https://www4.gotomeeting.com/register/555281479

How to Sell Your Business:  Tips for Lawn and Landscape Business Owners

This one-hour webinar led by Ron Edmonds of The Principium Group will cover the following topics:
Deciding to Sell Your Business;
Preparing Your Business for Sale;
How the Market Will Value Your Business;
Who Will Buy Your Business;
Choosing Advisors:, Brokers and Others;
Avoiding Mistakes.
Date:  Thursday, May 17, 2012
Time:  12:00 noon EDT, 11:00 am CDT
Register here:  https://www4.gotomeeting.com/register/250897679

Building a Sellable Business with John Warrillow

John Warrillow, the bestselling author of Built to Sell: Creating a Business That Can Thrive Without You, will lead a one-hour presentation on building a sellable business. Built to Sell was ranked by both Inc and Fortune Magazine as one of the best business books of 2011. During this unique session, John will present the six steps to making a business sellable and discuss the principles of increasing the value of your company – John will also take your questions directly.
Date:  Tuesday, May 22, 2012
Time:  11:00 am EDT, 10:00 am CDT
Register here:  https://www3.gotomeeting.com/register/187791014

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Please tell Jeff you heard about him here.

Thanks, Ron Edmonds

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Why would two companies in the same industry, with the same financial
performance, command vastly different valuations? The answer often comes down to how much each business is likely to grow in the future.

The problem is that a lot of successful businesses reach a point where their growth starts to slow as the company matures. In fact, the price of doing a great job carving out a unique niche is that the specialty that made you successful can start to hold you back.

If you make the world’s greatest $5,000 wine fridge, you may have a successful, profitable business until you run out of people willing to spend $5,000 to keep their wine cool.

Demonstrating how your business is likely to grow in the future is one of the keys to driving a premium price for your company when it comes time to sell. To brainstorm how to grow beyond the niche that got you started, consider the Ansoff Matrix. It was first published in the Harvard Business Review in 1957 but remains a helpful framework for business owners today.

Sometimes called the Product/Market Expansion Grid, the Ansoff Matrix shows four ways that businesses can grow, and it can help you think through the risks associated with each option.

Imagine a square divided into four quadrants representing your four growth choices, which include selling…
1. existing products to existing customers,
2. new products to existing customers,
3. existing products to new markets, and
4. new products to new markets.

The choices above are presented from least to most risky. In a smaller business, with few dollars to gamble, focusing your attention on the first two options will give you the lowest risk options for growth.

Existing products to existing customers

It’s natural to feel like you’re being greedy when you go back to the same customers for more of their dollars, but the opposite can often be true. Your best customers are usually the ones who know and like you the most and are often pleased to find out that you – someone they trust – are offering something they need.

Greg is a hardware store owner who came to understand the Ansoff Matrix. Greg earns a 150% mark up on cutting keys but his cutter was hidden in a corner of the store where nobody could see it. As a result, he didn’t cut many keys. One day, Greg decided to move the key cutter and position it directly behind the cash register so everyone paying for his or her hardware could see the machine. Customers started seeing the cutter and realized – often to their pleasant surprise – that Greg cut keys.
Not surprisingly, Greg started selling a lot more keys to his loyal customers. The key cutter didn’t woo many new customers, but it did increase his overall revenue per customer.

If you want to sell more of your existing products to your existing customers, draw up a simple chart of your products and services. Don’t be afraid to dust off those old products that you haven’t paid much attention to lately. List your best customers’ names down one side of the paper and your products across the top. Then cross-reference your customer list with your product list to identify opportunities to sell your best customers more of your existing products.

New Products to Existing Customers

Another approach to growth is to sell new products to existing customers. For example, there is a BMW dealership owner in the Midwest whose typical customer is a family patriarch in his forties. When he felt like he had saturated the market for well-heeled forty-something men in his trading area, he thought about what other
products he could sell his existing customers. But instead of defining his customer as the forty-something man, he decided to think of his customer as the financially successful family and his market as their driveway.

Instead of trying to sell more BMWs into a market of diminishing returns, he bought a Chrysler dealership so he could sell minivans to the spouses of his BMW buyers. He then realized that a lot of his customers had kids in their teens so he bought a Kia dealership to sell the family a third, inexpensive car.

Once you become successful, it can be tempting to sit back and enjoy your success. But in order to drive up the value of your business, you need to be able to demonstrate how you can grow, and the least risky strategy will be to figure out what else you could sell to your existing customers.

If you are curious to see how your growth stacks up and if you’re building a business you could sell one day, take the 13 minute Sellability Score questionnaire: http://sellabilityscore.builtosell.com/?advisor=BRETY3HWR57BQ1

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1. Valuations remain attractive for acquirors

Typical valuations in the green industry remain highly attractive for acquirors.  A combination of relatively few transactions during the downturn and the challenging financing market in recent years have combined to keep valuations quite attractive for acquirors in the lawn and landscape industry, particularly compared to the periods of rapid consolidation a few years ago.

2. As the market improves, there is an opportunity to increase market share

The landscape services industry is expected to have solid growth in 2012 and better growth in 2012.  Industry projections call for industry-wide revenues to grow over 4% in 2012 and over 7% in 2013. In prime markets, operators can expect growth to exceed these levels.  A well-orchestrated acquisition may allow an acquiring company not only their share of industry growth but  growth based on a target company’s market share as well.  This can have the effect of significantly increasing the return on investment associated with an acquisition.

3. The opportunities may be greatest for comprehensive landscape services companies with a design-build segment

During the recession, competition became very acute within the commercial landscape maintenance segment, compressing margins for many companies.  Although design-build companies in many (but definitely not all) markets experienced sharply reduced demand, margins have often remained much higher than in the maintenance segment.  Although various factors have lessened the demand for design-build companies as acquisition targets, in select situations, the returns may be substantial.  Valuations have been most constrained for these companies, but in many markets, their business has rebounded considerably  with the economic recovery as both commercial and residential customers are beginning to take on projects that were delayed during the recession.  In addition, homeowners who are tending stay in their homes for a longer period due to lower home values are taking on home improvement projects including, in many cases, large landscape projects.  As a result, buyers may be able to quickly recoup the acquisition costs of strategically placed design-build firms.

4. There is an increasing supply of quality acquisition targets to consider

As we have noted in the past, there are almost always more buyers than sellers for landscape services businesses.  Typically business owners are reluctant to consider the sale of their business unless personal factors such as health, family issues, retirement, etc. come into play.  Because relatively few transactions have been completed in recent years, there is a backlog of companies who have a reason to need to pursue a sale opportunity.  As a result, we believe there are more potential acquisition targets available now than in recent memory.

5. Pending tax changes may make sellers more motivated this year than they will be in the future

In addition to the backlog of transactions, potential sellers are concerned about the potential for significant increases in tax rates associated with transactions.  Unless there are changes made this year, long-term capital gains tax rates are scheduled to increase from 15% to 20% effective January 1, 2013 and the maximum ordinary income tax rate is scheduled to increase from 35% to 39.6%.  The specter of higher tax rates will cause even more potential sellers to seriously consider a transaction in 2012 that will avoid these scheduled tax increases.

6.  The financing market has improved considerably

Acquisition financing is available from a number of sources.  The US Small Business Administration guaranteed over $30 billion in loans to small business in 2011, an all-time record for the agency.  SBA loans are made by commercial banks and some non-bank lenders.  Under the program, the SBA guarantees 75% of the loan amount against payment default. Most US banks participate in SBA lending programs.  The SBA’s 7(a) program is often used for business acquisitions.  If SBA loans are not right for your business and transaction, there are often other loan options available for financing acquisition transactions.

As you can see, there are lots of reasons for a landscape business to consider making an acquisition in 2012.  While many business owners are understandably cautious coming out of the economic downturn, the opportunity to make an acquisition that can positively affect a business is significant right now.  As one friend of mind says, these are the times that businesses are built.

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If you were to draw a picture that visually represents your role in your business, what would it look like? Are you at the top of a traditional Christmas-tree-like organizational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?

As anyone who has tried to fly United when O’Hare has been hit by a snowstorm knows, a hub-and-spoke model is only as strong as the hub. The moment the hub is overwhelmed, the entire system fails. Acquirers generally avoid hub-and-spoke managed businesses because they understand the dangers of buying a company too dependent on the owner. Here’s a list of nine warning signs you’re a hub-and-spoke owner and some suggestions for pulling yourself out of the middle of your business:

1. You sign all of the checks

Most business owners sign the checks, but what happens if you’re away for a couple of days and an important supplier needs to be paid? Consider giving an employee signing authority for checks up to an amount you’re comfortable with, and then change the mailing address on your bank statements so they are mailed to your home (not the office). That way, you can review all signed checks and make sure the privilege isn’t being abused.

2. Your mobile phone bill is over $200 a month

If your employees are out of their depth a lot, it will show up in your mobile phone bill because staff will be calling you to coach them through problems. Ask yourself if you’re hiring too many junior employees. Sometimes people with a couple of years of industry experience will be a lot more self-sufficient and only slightly more expensive than the greenhorns. Also consider getting a virtual assistant (VA), who can act as a first line of defense in protecting your time. You can find a VA by filling out the request for proposal at http://www.ivaa.org/.

3. Your revenue is flat when compared to last year’s

Flat revenue from one year to the next can be a sign you are a hub in a hub-and-spoke model. Like forcing water through a hose, you have only so much capacity. No matter how efficient you are, every business dependent on its owner reaches capacity at some point. Consider narrowing your product and service line by eliminating technically complex offers that require your personal involvement, and instead focus on selling fewer things to more people.

4. Your vacations suck

If you spend your vacations dispatching orders from your mobile, it’s time to cut the tether. Start by taking one day off and seeing how your company does without you. Build systems for failure points. Work up to a point where you can take a few weeks off without affecting your business.

5. You spend more time negotiating than a union boss

If you find yourself constantly having to get involved in approving discount requests from your customers, you are a hub. Consider giving front-line, customer-facing employees a band within which they have your approval to negotiate. You may also want to tie salespeople’s bonuses to gross margin for sales they generate so you’re rewarding their contribution to profit, not just chasing skinny margin deals.

6. You close up every night

If you’re the only one who knows the close-up routine in your business (count the cash, lock the doors, set the alarm), then you are very much a hub. Write an employee manual of basic procedures (close-up routine, e-mail footer to use, voice mail protocol) for your business and give it to new employees on their first day on the job.

7. You know all of your customers by first name

It’s good to have the pulse of your market, but knowing every single customer by first name can be a sign that you’re relying too heavily on your personal relationships being the glue that holds your business together. Consider replacing yourself as a rain maker by hiring a sales team, and as inefficient as it seems, have a trusted employee shadow you when you meet customers so over time your customers get used to dealing with someone else.

8. You get the tickets

Suppliers’ wooing you by sending you free tickets to sports events can be a sign that they see you as the key decision maker in your business for their offering. If you are the key contact for any of your suppliers, you will find yourself in the hub of your business when it comes time to negotiate terms. Consider appointing one of your trusted employees as the key contact for a major supplier and give that employee spending authority up to a limit you’re comfortable with.

9. You get cc’d on more than five e-mails a day

Employees, customers and suppliers constantly cc’ing you on e-mails can be a sign that they are looking for your tacit approval or that you have not made clear when you want to be involved in their work. Start by asking your employees to stop using the cc line in an e-mail; ask them to add you to the “to” line if you really must be made aware of something – and only if they need a specific action from you.

If you are curious to see if you’re a Hub & Spoke manager and if you have a business you could sell one day, take the 13 minute Sellability Score questionnaire: Sellability.PrincipiumGroup.com

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Dreamscapes will continue to operate under its existing name as a division of Suburban, under the leadership of Wes Pechin, Dreamscapes’ founder.  Dreamscapes  will now offer its clients landscape maintenance services, in addition to design-build.

Jim Biehler of Suburban has indicated they are looking for additional acquisition opportunities.

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“I spoke with many companies to make sure that I chose a company that is capable of providing the high level of service and results that my customers expect from me,” Woodbury said. “I have met with Lawn Dawg owner Jim Campanella on several occasions, and I can tell you that he is committed to providing the absolute best results and service possible. I am comfortable knowing that Lawn Dawg will be handling my customers’ lawns this year and hopefully for years to come.”

President Jim Campanella shares his enthusiasm: “I am truly honored that Talbot chose Lawn Dawg as the best fit for his customers. Over the next several weeks I will work closely with Talbot and his customers to ensure a smooth and seamless transition. This acquisition further solidifies Lawn Dawg’s commitment to become the leader of lawn care services in New Hampshire and the northeast.”

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