From the top – Lawn & Landscape
Lawn & Landscape hosted its 5th Top 100 Executive Summit and Awards in August in Scottsdale, Arizona. Below are recaps of 3 panels that took place at the event. To read about the event’s keynote presentation, visit bit.ly/top100keynote.
Mergers and acquisitions won’t be slowing down anytime soon in the green industry.
As mergers and acquisitions continue to heat up the green industry, panelists at Lawn & Landscape’s Top 100 Executive Summit weighed in our where they see the market heading, how to get your business ready to be sold and how to approach acquisitions.
Ed Bates, VP of corporate development and M&A of Brightview, says there’s been no shortage of activity as of late, and Jerry Schill, CEO of Schill Grounds Management, predicts that activity will continue.
“There’s still a tremendous amount of activity but (industry wide) we’re down a little bit compared to last year,” Bates said. “It’s still very active and very robust.”
Bjorn Gjerde, CFO Senske Services, adds the due diligence is taking longer despite a continued upward trend in M&A, while JT Price, CEO of Landscape Workshop says private equity will continue to be involved in deals.
“There’s more and more private equity involvement in every industry,” Price says. “You’re just going to get more and more involvement in this industry.”
Price says there are some benefits to private equity entering the landscape market.
“It’s professionalizing dramatically,” he says. “But it’s a performance-based world…if my team and I don’t perform they will find somebody who will.”
Schill adds that companies have to be willing to adapt and change, and in influx of funds will help grow the company.
“We’ve got a great private equity partner who’s great at having capital for us to go out and expand our business,” he says.
When it comes to being ready to sell your company, Schill says you have to make sure your quality of earnings are bundled up and you truly understand what your business is worth.
“Everyone probably thinks their business is worth a lot more than it actually is,” Schill says.
Bates adds preparedness is critical and having the financials clean and in order is essential.
“Get an M&A attorney as well,” he says. “Make that decision early on…it is a lot of work to go through one of these transactions.”
GOOD THINGS TAKE TIME. When it comes to acquiring a company, the process is important.
Schill describes it as a toolkit. Getting the leads and researching the pipeline of activity are the biggest first steps.
Bates says 80% of the deals BrightView do, they develop that relationship organically. And taking that time to build those relationships is vital. He says his longest deal took about three years.
“It was exploratory at first, and things just evolved over time,” he says. “When it came time for the company to make the decision — they were happy.”
Price agrees and says that while getting the deal done quick is great, but fast isn’t always better.
“It’s also so important to do what you say you’re going to do,” he adds.
Bates acknowledges there are challenges with every deal, but common hurdles to get past include branding changes and a lack of communication from the top down in companies being sold.
All the panelists say there’s no set timeline for a brand takeover, but it’s about being communicative and taking the proper time needed in each scenario to make the switch.
Gjerde says a good strategy is to set expectations on timelines early and that can alleviate a lot of issues.
Price adds another hurdle is people sharing news of the deals too early.
“You are inserting a larger amount of risk into the deal if you can’t keep your mouth shut,” he says with a laugh.
Schill knows from going through it himself the process is extremely personal. He says being transparent is critical yet have empathy for what the business owner is going through.
Once the acquisition is made two cultures must become one. That’s where post-merger integration comes in.
“It’s really important to have one unified culture — and the brand is just one part of that,” Price says.
Bates says he could have several meetings with a potential partner before the numbers even get talked about. Establishing parallels between cultures should always be the first step.
“It’s about fit, culture and alignment,” Bates says. ‘If you have those things, you have a really strong opportunity for success.’
Attract and retain
With labor an ongoing issue, putting people first becomes paramount.
The labor shortage was well documented before the pandemic and it’s only becoming a larger issue.
Steven Schinhofen, CEO of Harvest Landscape Enterprises, says he’d defined the problem as one word — expensive.
And with wages increasing, Chris Lee, president of EarthWorks, says it’s imperative companies rise to the challenge and a main element of that is keeping customers in the loop and aware of the costs. Lee notes that for every $1, 50 cents are going directly to labor.
MAKE THEM STAY. But what happens once you find those laborers? And how can companies improve retention?
Jackie Ishimaru-Gachina, president and CEO of Gachina Landscape Management, said in 2016 they had about a 90% turnover rate. And even with referral programs, they could not move that needle until a certification and training program was instituted.
“Everybody starts at the same level once they get onto the crew and the crews aren’t worrying about training them because they’ve been in the program for two months,” she says.
Lee too says EarthWorks has a dedicated training program that helps employees feel more empowered before they make it onto a permanent crew.
Nathan Dirksen, COO of Dennis’ 7 Dees Landscaping & Garden Centers, says employee appreciation is also a big factor.
“We’ve really seen a major change,” he says. Dirksen notes that company barbecues and other celebrations are great ways to start building a culture of appreciation.
While that was hard during COVID-19, Dirksen says they handed out gift cards to local restaurants so employees could go enjoy a nice meal on their own instead of gathering as a group.
Schinhofen says retention is all about mindset. And so, his company started providing personalized career paths for employees.
“We learned that when we put the right people in the right role, long-term retention becomes a thing,” he says. “Training and development is key.”
A proactive points system for foremen has also become a huge morale booster for Harvest Landscape. When foremen are reporting problems and upgrades on sites, they are awarded points that they can then cash in.
Dirksen notes that companies are expected to do more now for employees just to keep them happy and eager to stay. He adds that when it comes to recruiting new employees, your own staff is the best recruiter.
“We find the guys who are really good at recruiting, and we help them continue to do so,” he says.
FINDING THE RIGHT FIT. But being active in local and national associations and then engaging with young people entering the workforce are also important when recruiting.
When it comes to recruiting young people, Schinhofen says he cut the budget for recruitment and instead put all that money into buying the best equipment, which therefore enticed more people to want to come to Harvest.
“When people are trying to do the minimum thing, we go and do the maximum,” he says. “The generation now wants the best tools and the best equipment. They want to be a part of something.”
Young people also aren’t looking for long drawn-out phone calls. Panelists say utilizing texting, email, social media and QR codes can be a great way to recruit younger generations. Sustainability is also important when attracting the younger generation, notes Ishimaru-Gachina.
Lee says he recognized the struggles of retaining young workers so he switched approaches. Deciding that finding slightly older employees, with a focus on family and financial responsibility, was more beneficial.
“The turnover is much, much higher in the 18-21-year-old market,” Lee says. “So, we started to tailor our recruiting more to people with families…we really try to focus more on a family-type atmosphere and try and recruit those people. They find value in the things we’re doing that the 21 year-olds don’t always see.”
Lee says this goes along with team culture — something he defines as a palpable feeling of excitement and comradery.
“It’s hard to define but when you see it you know it really quickly,” he says.
Dirksen adds that it boils down to what the company believes in and how they interact with each other.
Ishimaru-Gachina says having clear core values, along with mission and vision statements makes a big difference when it comes to company culture.
“Redoing those strengthens who we are, and everybody felt like they have a say in it,” Ishimaru-Gachina says of the company’s recent revamp of these things.
Ultimately Schinhofen says the best way to showcase culture is just to let good employees go out and shine, which will lead to better retention and recruitment.
With great responsibility
Charitable giving and advocacy are sometimes overlooked but are vital components of running a successful company.
Leading by example is one of the most fundamental aspects of being a large, highly profitable business. There is a responsibility in being involved in community, charity, government, etc. And knowing how to do all this effectively is important.
“Today’s generation wants meaningful work,” notes Jon Georgio, chairman of the board for Gothic Landscape.
Jennifer Lemcke, CEO of Weed Man, agrees saying companies used to just focus on business side of things and it has evolved into cause marketing and being deliberate about doing the right thing.
“We want people to want to come and work for our industry, so for us it’s about how can we help influence the industry and be more intentional with all of this,” she says.
Chris Angelo, President CEO of Stay Green, says it’s about more than just talking the talk. He uses the analogy of buying a gym membership and not using it. To get results, there has to be active involvement.
And while self-satisfaction isn’t the goal here, Georgio says community involvement can also be beneficial to the bottom-line.
Ivan Giraldo, founder of Clean Scapes, adds that profitability is obviously important, but it’s about balance.
“While we’re doing all that we’re giving back to our future leaders of our cities and hopefully our country by working with the schools and other organizations out there,” he says. “It’s the long-term investment for Clean Scapes and our industry that’s important.”
Lemcke shares that some Weed Man franchisees actively seek out schools to support through a competition where one could win a $10,000 scholarship.
“This then gets promoted at the school level and now these parents are seeing we’re part of the community and we care about them,” she says. “It’s not just about writing the checks and getting the PR but being strategic and coming up with innovation in that space.”
Angelo also adds that there’s nothing wrong with a little self-promotion, but the focus should be on the cause.
“As an industry, there’s nothing wrong in talking about the good things that we’re doing,” Giraldo adds.
Lee says the best charitable giving opportunities are local ones where employees, customers and partners can see the impact.
SUPPORT THE CAUSE. In addition to community giving, governmental advocacy is another way to give back as a leading company.
Lemcke says she is a big proponent of joining local and national associations who have the resources to make change and lobby in the political realm.
“It is crucial to get involved in what’s happening now with regulations and mandates from the federal level down to local governments,” Giraldo says. “We need to be vocal about what we do… if we stay quiet, we will all be affected.”
All panelists agree that sitting silently has a negative impact and will cause mandates and regulations to just gain momentum and continue to reach across more states and municipalities. They encourage companies to get out and help spread the positive impacts of landscaping, lawn care and other related services.