MARYSVILLE, OHIO - Scotts LawnService acquired the lawn and tree care services of the J.C. Ehrlich Co.’s Green Team division. The sale officially closed on Jan. 23.
J.C. Ehrlich’s Green Team, Reading, Pa., totaled $10.1 million in 2000 revenue, according to Lawn & Landscape’s Top 100 List, but the sale only added $7 million to Scotts LawnService's $42 million total revenue, according to Mark Long, Scotts LawnService’s vice president of business development. The Green Team’s tree surgery, vegetation management and grounds maintenance services were not included in the purchase, and represented less than 15 percent of the $75-million J.C. Ehrlich Co., which primarily offers pest control services. According to Victor Hammel, J.C. Ehrilich president, the company decided to sell this portion of its company to focus more on its pest and termite control services.
After three years of keeping in touch with the J.C. Ehrlich Co. to exchange business updates, Long said Scotts LawnService was intrigued by the company’s reputation for quality service in its pest control business, and was confident in its discovery that the same was true for the lawn care business. “I saw that their retention of customers was high and that their revenue per customer was very high, so we confirmed this quality reputation through due diligence,” he said. “It’s obvious that over three generations, Victor Hammel (J.C. Ehrlich Co.’s president) and the Ehrlich family have put together a top-notch quality business.”
According to Long, this acquisition, as well as a few others made in the fall and winter after the end of its fiscal year, has brought Scotts LawnService to approximately $55 million in corporate revenue, not including its $10 million in franchise revenue. The company grew from $27 million in 2000 revenue to $42 million in 2001 and plans to continue growing in 2002. “System-wide right now, we’re probably at around $65 million, but by Sept. 30, 2002, we plan to have $78 million in corporate revenue,” he said. “Overall, combined revenue should be around $90 million by the end of September.”
When acquiring companies, Long said Scotts LawnService doesn’t want to “go into a city with the object of buying everybody,” he said. “Instead, we look at it as finding what company would be a good fit for us in terms of how we can grow the business. We ask ourselves, ‘Do they emphasize service? Do they emphasize revenue per customer and offer enough services per customer?’ We use those criteria to begin with and out of that falls the companies we have a purpose in acquiring that are in a market we want to expand into. This makes it a much more meaningful and purposeful part of our business plan instead of saying, 'Let’s just buy a company,' and slamming it in and hoping everything works out OK.
“We also think the Scotts' reputation helps us retain customers,” Long continued. “We’re very judicious about our due diligence process to make sure a company we acquire is going to fit and work with our company.”
Hammel remarked that J.C. Ehrlich was also impressed with Scotts' reputation.
"We chose Scotts because of their outstanding reputation as America's premier lawn experts," Hammel stated. "The Scotts name has been synonymous with beautiful lawns for over 125 years.
"Most importantly," Hammel continued, "Scotts was interested in retaining our coworkers. Seventy-five percent of Ehrlichs' lawn and tree care employees have either joined the Scotts organization or are staying with Ehrlich. This is great for our coworkers nad will provide continuity for our customers."
Scotts LawnService also has added to its management team to make integration of acquired businesses and the management of day-to-day operations run more smoothly, Long said. Tony Colatrella, who was the chief financial officer of the Scotts Co. North America, is now the senior vice president of Scotts LawnService, providing internal support to the growing division, Long said. Currently, Long’s duties focus on acquisitions and franchise development.
