Lawn & Landscape hosted its second Top 100 Executive Summit, an event for the highest-grossing lawn care and landscape companies in North America, which took place June 5-6. Industry leaders traveled to Denver to network, learn and receive their awards for making it on Lawn & Landscape’s 2018 Top 100 list. The following are some of the takeaways from the event.
Outlook on M&A.
Tom Fochtman, CEO of Ceibass Venture Partners, Brian Corbett, managing partner of CCG Advisors, and Ron Edmonds, principal consultant at The Principium Group, all agree that the market has never been better for those looking to sell their landscaping business.
“The market is frothy right now,” Fochtman said. “We’ve had private equity, but not like this.”
In Denver, the panelists shared a few important tips to consider if you’re thinking about selling in the current market.
1) Don’t wait. If you’re in selling mode, you want to be on top of things right now. “Leveraging will be a little tougher; rates are up a bit. I think this run will last a few more years. Don’t be waiting; be on it,” Fochtman said.
In our May issue, we reported that the boom in the economy won’t last forever, but the panelists all agreed there’s still time to secure a decent sale. Right now, Corbett said the holding period for private equity firms is four to seven years, which will offer a cushion to businesses looking to sell before the projected 2020 economic recession.
2) Talk to your employees. If you’re in the process of selling a business, employees may be concerned with how the sale will impact their jobs. The panelists all recommended being open with employees. “Your business is really only your employees and your customers,” Edmonds said. “That’s a major task that the buyer has – coming up with an action plan.”
Corbett recommends sitting down with your employees once the sale is finished, and explaining what you (the owner) did, why you did it and how it will impact them. He also said to wait a day or two to bring the new owner on board so that employees have time to process the change.
3) Do your due diligence. In prepping for a sale, it’s your job to ensure all your ducks are in a row. “There’s unlimited opportunity for hiccups. The biggest issue that comes up is inability to hold up to scrutiny,” Edmonds said.
One of the biggest hang-ups when it comes to selling is ensuring your labor force and the paperwork that goes with that are legally sound. Fochtman said he sees buyers bring in a labor attorney and go through every single I-9 on file, and if there’s ever a doubt, they may pull away from the deal. He would like to see every company using E-Verify to make it easier, and if necessary, using the H-2B process to find foreign workers.
asset protection mistakes.
Asset protection means placing personal and business assets beyond the reach of any potential threat. Ariel Enisman, attorney with the Presser Law Firm, said the No. 1 goal with asset protection is to avoid becoming a target.
“Make yourself look like such a difficult target and so expensive for someone to come after you,” she said.
During Lawn & Landscape’s Top 100 Executive Summit in Denver, Enisman explained that a well-structured asset protection plan involves ensuring that business owners own nothing but control everything.
“Get ownership rights out of your name,” Enisman said. “If you own something, you’re exposed.”
Keys to good asset protection plans include protecting every asset, make sure the asset protection plan fits with financial goals, keep the plan up-to-date and develop a plan that is simple yet cost-effective.
In order to have a strong asset protection plan in place, Enisman said the following are some of the biggest mistakes business owners should avoid in order to protect their assets:
- Hiding your assets. Enisman said it’s not about hiding what you have. It’s better to be upfront with your assets so that they can’t come back to hurt you in the long run.
- Titling your assets to “straws.” “What makes you think this person is less likely to get sued than you?” she said. Putting your assets in the name of someone else just to cover your bases is not the best way to protect what you have. Your friend or co-worker can get sued just as easily as you and lose their assets – and yours.
- Titling your assets to a spouse. Similar to assets in the name of another individual, giving your assets to your spouse can be just as risky. Enisman explained that if you own a vehicle that is registered in both your name and your spouse’s name, both the owner and the driver can be sued rather than just one party.
- Don’t break any laws. This may seem like a no-brainer but following laws to protect your assets will save you from devastating lawsuits. Make sure everything you do is 100 percent legal before taking action.
Leadership means partnership.
When Ty Bennett opened the keynote for Lawn & Landscape’s Top 100 Executive Summit in Denver, he asked attendees a blunt question: Why in the world would anyone follow you as their leader?
“The answer cannot be because you’re the boss,” Bennett said. “People don’t follow bosses. People follow people.”
Bennett is the founder of Leadership Inc., a speaking and training company. He was previously an entrepreneur who built a direct sales business with his brother when he was 21 years old that achieved $20 million in annual revenues. According to Bennett, being a leader requires much more than authority. He said it requires a concept called partner leadership.
With the unemployment rate low and keeping good labor a main problem in the landscaping industry, Bennett said it’s important to win commitment from employees.
“People are not committed to jobs,” he said. “People aren’t committed to companies. What drives commitment is people commit to people. The old adage was that people would commit to a person with a title, position and authority. But I don’t think that’s true in today’s world.”
Today, he said employees are looking for leaders who are genuine and invested in their employees – having relationships with employees is much more critical. That, he said, is part of being a partner leader.
Bennett offered these three tips on how business owners and managers could become partner leaders:
- Build genuine relationships with employees. According to Bennett, all business owners are in the people business. One key to becoming a partner leader is investing in employees, which means being genuine with them and getting to know them. He suggested giving back to employees as a simple way to invest in them – make them breakfast, take them to dinner, meet their families.
“Our ability to build relationships is the currency of business,” he said. “We need to become great at it. If you invest in your people, they’ll want to invest in you. We’re all wired that way. If someone punches you, you punch back; but if someone does something nice for you, you want to do something nice back.”
- Generate buy-in from employees. People support what they help to create. Bennett is involved with the National Speakers Association and when the association tried to change its name and logo without any buy-in from its members, there was a lot of backlash from members. So, he said the association backtracked to get buy-in on a name and logo change from its members.
“Our goal is to get commitment from our people, so we have to involve them in creation, otherwise they won’t commit,” he said.
Although getting buy-in takes extra time when trying to make changes, things will take longer and be more costly if employees don’t end up buying into the change made by managers and owners, just like it was for the National Speakers Association.
- Know that motivation is important, but it’s overrated. It’s good to motivate employees, but Bennett said partner leaders can’t forget that the flip side of motivation is removing obstacles and inhibitors that keep employees from achieving goals set for them. Partner leaders need to do both – motivate and help remove obstacles.
Bennett shared the story of how his young son came to him one morning and told him he didn’t know how to open the refrigerator while he had his hands full of toys. Bennett said he could have motivated his son to try harder to open the refrigerator, but the smarter option was to remove the obstacle and have his son drop the toys in his hands.
“Sometimes it’s better to remove the obstacles than motivate,” he said.
Inside look at Metco
As part of the Top 100 summit, Metco Landscape invited attendees to visit its operation a few miles outside of Denver. Metco ranked 28th on the 2018 list with more than $57 million in 2017 revenue and is focusing on growing its commercial maintenance division. The owner and managers gave attendees a look around its headquarters and shared stats.
Facts and figures about Metco:
$64 million: Amount bid to date with a 20 percent close rate for commercial construction
$25 million: Backlog of commercial construction work at Metco
5.5 million: Square feet of sod Metco installs each year
98,540: Tons of rock used by Metco last year
$25,000: The cost of mobilization for snowstorms
9,000: The number of trees installed last year
721: Pieces of equipment serviced at Metco’s headquarters
250: The number of H-2B workers processed in eight hours last season
Ask the Experts: Legal protections
Q: We are thinking about hiring someone who has a gray area in their non-compete agreement. Are non-compete agreements enforceable?
A: Enforceability depends on the scope of the agreement according to state law. Often, an agreement that precludes an employee from working in the industry for a period of time is unenforceable. The aspect of a non-compete that is most likely to be enforceable involves an agreement not to solicit your customers or employees for a fixed period of time.
In some states, if certain provisions of the agreement are illegal, the court may enforce the lawful provisions. In other states, if any aspect of the agreement is illegal, the entire agreement is unenforceable.
In my view, the question to answer is what do you need to do to protect your business? Usually, it’s the non-disclosure of confidential information and non-solicitation of customers and employees. I generally advise employers to make the agreement as limited as is possible, yet still protect the business. This includes the duration of the agreement.
For example, perhaps the limitation on solicitation by your sales manager would be two years, but for a supervisor it would be one year. If you don’t have a non-compete, nothing stops the employee from soliciting your customers the moment he or she quits. Be sure to consult with your business lawyer about drafting an enforceable agreement.
Q: How do I know if my company does enough to prevent and successfully defend a sexual harassment claim?
A: An industry where employees have contact with the public has a higher level of responsibility to train employees about behavior of third parties and other employees. The more training you do, the better shape you are in to prevent problems.
As a first step, develop a comprehensive policy that addresses harassment – not just sexual harassment. It should prohibit harassment based on protected class status (such as race and national origin) and harassment that may not relate to protected class status. The policy should prohibit any threatening, demeaning, abusive or taunting behavior. The policy also should prohibit retaliation for reporting harassment or participating in an investigation about harassment.
Review the policy during onboarding and at least annually thereafter. Members of the leadership team should lead the way in policy communication. Provide in-person training about harassment, what may constitute harassment, how to report it and what action will occur if it is reported, including protection from retaliation for either reporting the behavior or participating in the investigation.
Hold leadership team members to a higher level of accountability for their behavior. Require that employees report any behavior that they believe may violate the policy, even if they are not the recipient. Provide multiple options for an employee to report harassment. Whoever conducts an investigation about harassment/discrimination/retaliation should be trained on how to conduct a proper investigation. At the conclusion of the investigation, determine what action is appropriate. If it’s to separate the accused and the accuser, be sure the accuser is not adversely affected by this approach.
Richard Lehr, Esq., NALP Human Resources and Legal Advisory
Ask the Experts is brought to you in partnership with NALP, the National Association of Landscape Professionals. Questions are fielded through NALP’s Trailblazers, the industry’s leading company mentoring program. For more questions visit Landscapeprofessionals.org.
In the News: BrightView makes it official
PLYMOUTH MEETING, Pa. – BrightView officially went public June 28 when CEO Andrew Masterman rang the bell on the New York Stock Exchange.
The initial public offering of 21,300,000 shares of the company's common stock was priced at $22 per share, raising $468.6 million. Shares of BrightView’s common stock are being traded today under the symbol BV.
Masterman said the move is not only a positive for BrightView, but for the industry as a whole.
“This provides a platform for everyone to look to and say this is absolutely and unquestionably a very big and prominent industry,” he said. “If your aspiration is to be someone who runs a smaller organization, that’s great. If you have aspirations to be involved with a larger company, it all exists within the landscaping industry.”
While some would say going public puts more emphasis on the bottom line and not the customer, which may be a stain on the industry, Masterman said that won’t be the case.
“All of us in business, we are in it for several reasons; for one, we love the industry, we love being involved with our crews and we love making great landscapes out there," he said. "For those who have invested their own money to build their own enterprises or now in a public company like BrightView, we want to make some money. We are not misaligned. The only difference is now we have a vehicle where everyone can participate in BrightView’s growth and the industry's.”
BrightView will offer stock grants to crew supervisors who have been with the company at least 10 years and all salaried, exempt employees.
“You can start as a gardener and if you make it to a crew supervisor and have been there 10 years, you get that grant,” he said. “That starts today, so if you have been there 30 years, you get it now. It’s about engaging our leadership and that’s leadership at all levels.”
In the fall, all employees will be able to buy stock at a discounted rate.
BrightView has acquired eight businesses with more than $188.2 million in total revenue since Jan. 1, 2017.
Masterman said the company's approach to acquisitions won’t change after going public.
He added that he doesn’t have a set number of acquisitions in mind to make, he is instead keeping an eye out for companies that make sense to acquire.
“There is abundant room for us to continue to grow into the market and we have a great competitive landscape where we have really good competition growing out there as well,” he said.
BrightView reported a revenue of $2.3 billion last year, making it the highest-grossing landscape company in the U.S. and Canada, and No. 1 on Lawn & Landscape’s 2018 Top 100 List. The company, based in Plymouth Meeting, Pennsylvania, employs 22,000 people.
Formed in 2014 when KKR, parent company of Brickman, acquired ValleyCrest from Michael Dell’s MSD Capital, the combined companies rebranded as BrightView in 2016.
MSD is still a minority shareholder of BrightView according to the SEC statement.
OPEI hosts 66th annual meeting, adds board members
BONITA SPRINGS, Fla. – The Outdoor Power Equipment Institute held its 66th annual meeting, focusing on messages of innovation and industry advancement.
Chief among industry updates heard at the meeting, the trade association introduced its new statistics vendor, Vault Consulting, which showcased updates to the members-only program’s capabilities and categories. OPEI staff also shared the latest forecast updates for key categories of equipment.
OPEI also rolled out a preview of a new television program sponsored by TurfMutt and produced in partnership with Hearst Television and Litton Entertainment. The show, which highlights the importance of lawns and outdoor space to families and pets, will debut this fall on the CW.
Planning is already underway for OPEI’s 2019 annual meeting, to be held June 18-20 at the Stein Eriksen Lodge in Park City, Utah. Members are encouraged to contact association staff with suggestions for topics or speakers.
The OPEI board of directors met in conjunction with the annual meeting, installing its 2018-2019 leadership. The board bid outgoing chairman Dan Ariens, chairman and CEO of Ariens Company, a fond farewell and welcomed incoming Chairman Tom Cromwell, group president, Kohler Power, Kohler Company.
The board also has appointed Earl Bennett, president, Husqvarna Professional Products, to the board.
“Earl Bennett is a longtime advocate for the outdoor power equipment industry, and we welcome his perspective on the OPEI board of directors,” said Kris Kiser, president and CEO.
The 2018-2019 OPEI board of directors comprises:
Mr. Tom Cromwell, group president, Kohler Power, Kohler Company
Mr. Bjoern Fischer, president, STIHL
Mr. Rick Olson, chairman, president and CEO, The Toro Company
Immediate Past Chair
Mr. Dan Ariens, chairman and CEO, Ariens Company
Mr. Earl Bennett, president, Professional Products, Husqvarna
Mr. Edward B. Cohen, vice president, government & industry relations, American Honda Motor Company, Inc.
Mr. Tim Dorsey, president, Echo Incorporated
Mr. Tom Duncan, president and CEO, Positec USA, Inc.
Mr. Peter Hampton, president and CEO, Active Exhaust Corporation
Mrs. Jean Hlay, president and COO, MTD Products, Inc.
Mr. Tim Merrett, vice president, Global Platform Turf & Utility, Deere and Company
Mr. Lee Sowell, president, Outdoor Products, Techtronic Industries
Mr. Todd Teske, chairman, president and CEO, Briggs and Stratton Corporation
Mr. Mark Wagner, president and CEO, Club Car, LLC
Mr. Joe Wright, president and CEO, Excel Industries
NALP hires VP of government relations
ARLINGTON, Va.–The National Association of Landscape Professionals hired Andrew Bray as its vice president of government relations beginning July 9. He will replace Paul Mendelsohn, who left the association in June.
Bray is a seasoned association advocate, having worked in a government relations role for the North American Meat Institute, the Grocer Manufacturers Association and most recently as vice president of public policy at the National Pest Management Association.
Early in his career, Bray honed his policy, advocacy and political skills working on Capitol Hill in a congressional office and while working on multiple federal, state and local campaigns. He earned his law degree in 2013 and maintains an active license to practice law in the state of Virginia.
“Andrew will be a huge asset to our members and to the industry,” said Sabeena Hickman, CEO. “He is not only a seasoned government relations pro, but he also has extensive experience working on key issues our industry faces, including pesticide regulation, proposed product restrictions and labor laws.”
RCI acquires GPL Landscaping
SLIDELL, La. – Rotolo Consultants Incorporated has acquired GPL Landscaping, a commercial landscape and maintenance company based in Miramar Beach, Florida. This represents RCI’s third acquisition in the past year.
This acquisition establishes RCI’s presence in Florida. RCI also has branch offices in Louisiana, Mississippi, Alabama and Tennessee. RCI is now employing about 700 people.
“We are very excited about the acquisition of GPL Landscaping,” said Keith Rotolo, president and CEO of RCI. “They come with an experienced management team that has been at the core of their success. RCI will now be able to offer our extensive landscape and construction scopes of work to a new client base while aggressively growing the existing landscape maintenance presence that GPL had established. We have wanted to be in this market for some time and GPL presented a great opportunity. Consistent with our long-term growth strategy, we will continue to explore acquisition opportunities in northwest Florida as well as in our core markets.”
GPL has provided landscape maintenance services to premier properties in northwest Florida since 2006. The owner, Judd Lisenby, plans to pursue other business interests. The entire GPL staff, including all key managers, will continue employment with RCI.
SavATree acquires Brooks and Barber Tree Management
BEDFORD HILLS, N.Y. – SavATree has acquired Brooks and Barber Tree Management in Bedminster, Pennsylvania.
Brooks and Barber was founded in 1986 by Craig Brooks. SavATree says that its highly trained workforce will merge well with the company's existing focus on sustainable tree care and preservation.
“We’re really excited to have Brooks and Barber joining our team,” said Daniel van Starrenburg, CEO of SavATree. “We share many of the same values and an unwavering commitment toward being the best in every market we serve.”
This acquisition will expand SavATree’s existing Bucks County branch with the aim of better serving landscape stewards throughout southeastern Pennsylvania.
“I couldn’t think of a better partner for my team than SavATree,” Brooks said. “I’m confident that this will be a successful relationship and beneficial for all of our clients.”
Brooks will stay on to provide ease to current clients. Clients will benefit from an increased range of service offerings, including arboriculture and professional lawn care with organic options.