When it’s time to sell

By now, just about every landscape business owner we talk to across the country has received multiple letters, emails and/or phone calls inquiring about their interest in selling their company. You’ve doubtless heard about all of the “dry powder” private equity firms have available to invest and how the landscaping industry is a desirable investment area.

The number of potential investors continues to expand with new groups as well as experienced buyers who may have already had one liquidity event and are moving up into the next size category. In addition to those buyers, as seen at the Lawn & Landscape Business Builders’ Summit, ambitious regional and local competitors who want to grow are actively seeking strategic additions to their businesses.

The answer from an overall economic perspective is “yes.” However, for your individual business, the answer must be that depends on the facts about your business.

The right time to sell is not when:

• Your business has been experiencing a downturn in sales or profitability (especially for more than one year).
• When you are the go-to person, and you don’t have a “second in command” or other leaders who can run the business without you.
• When your health is impaired, or you are distracted with serious unexpected family or personal matters.
• When you don’t have a strategy or plan to turn the business around if results are beneath industry standards.

On the other hand, it may be time to sell now if:

• Your business is performing at, or above, industry benchmarks and you are in a growth mode while maintaining profitability.
• You have a large and growing amount of recurring revenue (maintenance, including enhancements) as part of your revenue base.
• You have strong leaders in place who can and do run the business without you for weeks at a time.
• Your clients are happy as witnessed by high retention rates and willingness to pay for services at fair prices.
• Your employees are happy as witnessed by longevity of service and measures of profitability per revenue (and others).
• All of these factors make up an estimated selling price that will result in a net after-tax amount that will support your post-sales lifestyle. This may include agreeing to remain with the buyer for several years for “another bite of the apple” in post-sales participation.

These are just a few of the facts for a business owner to review in determining his readiness to sell. In addition to these, one of the most important overlooked factors is your personal readiness to step away and the emotional component of selling.

Is now a good time for you to sell your landscape business? Whether you are ideally positioned now or would like to be in the future, smart business owners are planning with their exit in mind. Your strategic plan and annual business plans will benefit by using this lens to view your business.

Cream of the Crop features a rotating panel from the Harvest Group, a landscape business consulting company. Alison Hoffman is M&A representative. harvest@giemedia.com