What this merger means

Departments - Editor's Insight

June 10, 2014
Chuck Bowen
Editor's Notebook Mergers and Acquisitions
Chuck Bowen

In case you’ve been living under a rock for the past few months, you’ve heard that Brickman is buying ValleyCrest. Well, technically, the private equity group that owns a majority stake in Brickman (KKR) is acquiring a majority stake in ValleyCrest from its private equity owners (MSD Capital).

It’s easy to sit back and think it has no bearing on you, an average landscaper in an average market. But it does. Here’s why.

  1. Confusion in the marketplace means an opportunity for you to solidify relationships with clients who appreciate knowing the CEO and working with a truly local company. But even as large as this combined company will be (close to $2 billion in revenue), it still represents less than 3 percent of the overall economic impact of the landscape industry. The other 97.5 percent of the industry still has a lot of marketshare to go after.
  2. Combining two companies with 20,000-plus people means many good employees at lots of branches are going to get jittery and maybe look for new opportunities. The best time to start talking with those branch managers and foremen was about six months ago. The second best time is right now.
  3. If you’ve been competing against Brickman and ValleyCrest, you now will compete against just one. And, that new company is going to be distracted by trying to combine two huge organizations and less focused on competing with you on the ground.
  4. The merger means more attention from investors in lawn care and landscape businesses. KKR has a lot of money – $94 billion in assets under management, according to its latest annual report – and has shown that it’s willing to spend it. And KKR is one of the most respected private equity firms around. Its acquisitions of Brickman and ValleyCrest in less than six months legitimize the landscape industry as an area of wise investment for other firms. If you’ve got the right fit, you might be looking at a pretty good payday.

This isn’t the case of a strong company buying a weak one to grow its market share or acquire key talent. This really is a merger of two strong and growing firms – strong enough to go public once they get their house in order.

This combined company will be a truly national snow and landscaping powerhouse. Andrew Kerin and Roger Zino and their management teams are very smart. They know enough to realize what’s working and what’s broken inside each organization, take the best parts and put them together.

This merger is a great opportunity for them, and despite what you might think, it’s a great opportunity for you.

– Chuck Bowen