Acquiring Equity
The industry has seen more investment by private equity
firms, and the trend is likely to continue. BY CHUCK BOWEN
Despite the down economy, merg- ers and acquisitions activity has
continued apace for the green industry. Buoyed by an influx of investment
capital from private-equity firms, companies like Yellowstone Landscape
Group, the Brickman Group and ValleyCrest Cos. have been on a shopping
spree, picking up big-name companies
and people to position themselves for
an eventual economic turnaround.
Brian Corbett, managing partner
at CCG Advisors, Atlanta, worked on
the deal between Austin Outdoor and
Plano, Texas-based Yellowstone that
was announced in January. He says the
increased interest from private equity
firms could be a boon for business
owners, and the industry as a whole.
“It means opportunity. If you’re
a guy running a business that’s not
going to the next generation, the fact
that there’s equity money looking to
get into the industry allows for more
buyers and, you’d think, more deals,”
Corbett says.
And when private equity gets involved, Corbett says, they aren’t usually content to sit on the sidelines.
Gridiron Capital started Yellowstone
in April of 2008 and simultaneously
bought Piedmont in Atlanta and Bio
Landscaping in Houston. Then they
added Austin Outdoor, West Palm
Beach, Fla.-based Dolphin Landscape
and Outdoor Environments, in Houston, this year.
“They don’t buy to watch (things)
grow organically,” he says. “They get
active looking at targets and go about
buying more companies.”
PRIVATE EQUITY INVESTMEN T. Corbett
says the landscape industry has had
some level of private equity for years,
especially the larger national companies like Brickman and ValleyCrest.
But now, more funds are looking at
the green industry because the companies – especially high-end commercial
maintenance companies – bring in
recurring revenue.
And while 2009 wasn’t the best, the
industry has growth potential.
“If I have a company cutting my
grass versus the Ritz-Carlton, I might
cut my grass myself,” Corbett says.
“The Ritz-Carlton is not going to do
that. They have a very solid base of b2b
relationships that gives them comfort
to being somewhat recession-proof.”
But the industry has some negatives
to investment companies: the low barriers to entry mean there is always a lot
of competition and downward price
pressure. Private-equity firms also
