With news of BrightView filing for an initial public offering, it makes official what has been widely speculated throughout the industry – the company going public.
BrightView, the No. 1 company on Lawn & Landscape’s Top 100 list with more than $2.2 billion in 2017 revenue, filed with the SEC for an IPO of $100 million.
The company will offer 21.3 million shares priced between $22 and $25 per share. The registration statement relating to these securities has been filed with the SEC, but has not yet become effective.
According to the registration statement, these securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective.
The company, which is backed by private equity firm KKR, could raise an estimated $500 million from the IPO, according to Renaissance Capital. BrightView plans to list on the NYSE under the symbol BV.
BrightView intends to use the net proceeds from the offering to repay borrowings outstanding under its second lien term loan facility and its revolving credit facility and, to the extent there are any remaining proceeds, to repay borrowings outstanding under its first lien term loan facility.
BrightView announced it will offer 21.3 million shares priced at $22 to $25 each.
BrightView expects to grant the underwriters a 30-day option to purchase up to an additional 3,195,000 shares of its common stock.
Some industry insiders say this move is positive for the landscaping and lawn care world.
“In the big picture, this totally legitimizes the green industry and profession,” said Tom Fochtman, founder of Ceibass Venture Partners, an investment banking firm based in Denver. “A successful IPO and ultimately a publicly owned company puts landscaping on the map in a big way."
Fochtman said it was one thing to have private equity firms investing in the green industry, but BrightView’s move adds to the number of eyes on landscaping.
“Having a publicly owned company, owned by both individual and institutional investors, shines a very bright light on our profession,” he said.
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. The company, based in Plymouth Meeting, Pennsylvania, employs 22,000 people.
“I think this is incredibly positive news for KKR and BrightView as well as for the commercial landscape industry,” said Brian Corbett, founder and managing partner of CCG Advisors, an investment banking firm based in Georgia and Tennessee that specializes in the commercial landscape industry. “The IPO validates the tremendous investment made by KKR and other private equity groups in the sector over the last five years.”
While ServiceMaster, former parent company to what is now LandCare, was a public company before being taken private in 2007, BrightView will be the first pure-play, publicly-traded commercial landscape service company in the U.S., Corbett said.
BrightView has filed for an IPO of $100 million but Fochtman said that could grow.
“The $100 million is testing the IPO waters and my guess is will get amended for a much higher amount,” he said. “Or there will quickly be a secondary offering. It’s more capital to invest in acquisitions. The $100 million does nothing to pay down debt.”
In the past few years, mergers and acquisitions activity has been high in the green industry. BrightView has been especially active, making a number of acquisitions, most recently scooping up Environmental Earthscapes, a Tucson, Arizona-based firm that operates as The Groundskeeper. The company posted $68 million in 2017 revenue and ranked 19th on the Top 100 list.
BrightView included in its filing that it has acquired eight businesses with more than $188.2 million in total revenue since Jan. 1, 2017. For some perspective on the size of those acquisitions, Gothic Landscape, which ranked 5th on the Top 100 list, generated $182 million revenue last year. So, BrightView’s acquisitions alone in just a year combined for enough revenue to be the fifth largest landscaping company.
Ron Edmonds, president of The Principium Group, an advisory firm serving the lawn and landscape industry in the areas of mergers & acquisitions and exit planning, said the offering could be a sign that KKR wants to sell BrightView.
Since BrightView filed for an IPO, industry experts say other large landscaping companies may go public.
“This is a partial exit strategy for KKR & Co. With transactions like BrightView, the exit strategies are more limited as there are not as many private equity companies with an appetite for a business this large,” Edmonds said. “The continuing existence of viable exit strategies will help fuel further private equity investment.”
While there is positive feedback from the move, there is some concern this could affect how BrightView services customers. Some comments on Lawn & Landscape’s Facebook page after the first IPO story was posted indicated the company could be more focused on servicing shareholders instead of customers.
“That is a concern with public companies – serving shareholders more than customers, but all the great public companies that one can rattle off have found the right mix,” Fochtman said. “It will be BrightView’s decision on how they operate. One thing KKR has learned is that it’s a people business – employees and customers. And the basics of what it costs to replace a client vs. renew a client. It remains to be seen, but this is not a concern I have at the moment.”
With BrightView filing for an IPO, another large green industry company could also go public. David Alexander, president of TruGreen, a $1.3 billion company that ranked second on Lawn & Landscape’s Top 100 list, told the Commercial Appeal last July that the company could go public.
“The situation with TruGreen is pretty similar and I would expect them to initiate a public offering as a partial exit strategy for their private equity owners, Clayton Dubilier & Rice, in the relatively near future, just as ServiceMaster did earlier,” Edmonds said.
Fochtman said it’s hard to say when the M&A activity in the industry will die down, but even with no end in sight, he said now is the time to sell.
“I’ve said many times to my clients, as the owner of a large commercial landscape company, I’d have sold it by now,” he said. “There has never ever been a better time to be a seller. I think there is more runway here but hard to say how much. I think everything is lined up to continue to be a seller’s market, but if I’m a seller, I don’t sit on the sidelines much longer. I make it happen now.”
Ramifications of ICE raid on Corso’s
After Corso’s was raided by ICE, AmericanHort shares its insights on what this means for the industry. By Conner Howard and Michelle Simakis
SANDUSKY, Ohio – U.S. Immigration Customs Enforcement agents raided two locations of Corso’s Flower & Garden Center in Sandusky and Castalia, Ohio, arresting more than 100 Corso’s employees on June 5. The company is a family-owned garden center that also features a landscaping division.
In a statement, Corso’s wrote that it demands proper documentation from all employees and ensures that all employer taxes are paid. Corso’s Flower & Garden Center said it is “fully cooperating with the government’s investigation” after about 200 law enforcement officers raided its facilities in Northwest Ohio and arrested 114 employees suspected of working in the U.S. illegally.
According to the Associated Press, the ICE agents were targeting specific individuals suspected of tax evasion and identity theft stemming from an October audit of the company that found 123 suspicious documents out of the 313 employee records reviewed.
According to a May news release from ICE, “a notice of inspection alerts business owners that ICE is going to audit their hiring records to determine whether they are complying with existing law. Employers are required to produce their company’s I-9s within three business days, after which ICE will conduct an inspection for compliance. If employers are not in compliance with the law, an I-9 inspection of their business will likely result in civil fines and could lay the groundwork for criminal prosecution if they are knowingly violating the law.”
Craig Regelbrugge, senior vice president of industry advocacy & research at AmericanHort, said most employers do not knowingly take the legal risk of hiring undocumented workers; usually these employers are being duped by falsified documents.
“The vast majority of employers, when they’re hiring, they’re following the letter of the law,” Regelbrugge said. “It just so happens that a lot of the people who are applying have documents that appear genuine but won’t stand up to the forensic scrutiny that gets applied when these audits are done.”
About 200 law enforcement officers raided two Corso’s Flower & Garden Center facilities in northwest Ohio, arresting 114 employees suspected of working in the U.S. illegally.
Corso’s statement, which was shared on its Facebook page, indicated that the company was not aware that some of its employees may be in the country illegally.
“Just as Corso’s has strived over the past 77 years to be honest and fair in its dealings with its employees, Corso’s expects its employees to be honest with it as well,” Corso’s statement read. “Corso’s strives to comply with U.S. employment laws and therefore asks its employees and prospective employees for honest and legitimate identification and documentation. If mistakes were made or if anyone used false, fraudulent, or otherwise disingenuous identification documents or other documents to secure employment at Corso’s, the company was not aware of those things. Corso’s looks forward to the resolution of this unfortunate situation and in the interim will continue to focus efforts on serving customers as the investigation proceeds.”
Corso’s added that it regretted the “stress and pain” the arrests caused to families, and that the company was “troubled” by some reports of alleged “poor treatment of our employees during the arrest process, including an apparent lack of information provided by federal authorities to family members of those arrested.”
According to a Facebook post from HOLA, a Latino advocacy organization based in Northeast Ohio, more than 200 children in Northwest Ohio have one or both parents who are in detention. The Corso’s employees were taken to facilities in Youngstown and Seneca County, Ohio, and St. Clair County, Michigan.
Sen. Sherrod Brown, D-Ohio, said in an email that his office is assisting children affected by the raid. “My first concern is for the children who were separated from their families by the raid, and my office is looking into what we can do to help the children,” Sen. Brown said. “Tearing families apart is not going to fix our broken immigration system. Instead, we need a bipartisan solution.”
ICE ramps up enforcement.
The impact of immigration on the horticultural workforce has been a common topic of discussion among experts, and Regelbrugge said that the raid on Corso’s is only the most recent example of a wider crackdown on undocumented labor.
According to Craig Regelbrugge of AmericanHort, the raid on Corso’s is only the most recent example of a wider crackdown on undocumented labor.
“We've seen this before and it underscores the absolute importance of better tools and solutions for the industry to ensure access to a legal and sufficiently stable labor supply. I'm fearful that we're going to see a lot more of this,” he said.
According to a news release issued by ICE May 14, the agency has more than doubled its worksite enforcement investigations and I-9 audits in the past seven months.
Regelbrugge said the immigration and labor issues require a nuanced approach both in terms of legislation and industry adaptation.
“There will be people calling for the industry to sort of take a look in the mirror and go through some self-analysis and figure out how to get the work done with less labor,” he said.
SiteOne makes acquisitions, partners with NHLA
ROSWELL, Ga. – SiteOne Landscape Supply acquired Landscaper’s Choice Wholesale Nursery and Supply. Founded in 2000, Landscaper’s Choice is a distributor of nursery and landscape supplies to landscape professionals in the Naples, Florida, and Bonita Springs, Florida, markets.
“Landscaper’s Choice is a natural fit with SiteOne as they add nursery products to our existing irrigation, agronomic and landscape lighting product lines in Florida. This acquisition aligns with our mission to be the best full-line distributor to landscape professionals,” said Doug Black, chairman and CEO of SiteOne Landscape Supply. “Landscaper’s Choice has a rich history and talented team that shares SiteOne’s passion and desire to provide excellent quality, service and value to the customer. We are committed to delivering the best customer experience in the green industry and the combination of Landscaper’s Choice and SiteOne is yet another step closer to achieving our goal.”
The company also acquired Auto-Rain Supply, a distributor of irrigation products to landscape professionals in the Spokane Valley market, with five locations in Washington and Idaho.
SiteOne acquired Landscaper’s Choice and Auto-Rain, which are the company’s fifth and sixth acquisitions in 2018.
“Auto-Rain is a natural fit with SiteOne, as they help expand our geographic footprint into a new market. This acquisition aligns with our mission to be the best full-line distributor to landscape professionals and further bolsters our market position and strengthens our customer relationships,” Black said.
These two acquisitions mark SiteOne’s fifth and sixth acquisitions, respectively, in 2018 and the company plans to continue expansion.
In addition, SiteOne partnered with the National Hispanic Landscape Alliance, an organization dedicated to facilitating the upward mobility of Hispanic Americans as professionals and entrepreneurs in the landscape industry.