To say it was a busy 2019 for HeartLand would be an understatement. The company grew 189% going from $55.7 million in revenue in 2018 to $155 million in 2019. They acquired five commercial landscaping companies last year totaling almost $95 million in revenue, while also growing organically, landing the company at No 14.
Kansas City based HeartLand was founded in 2016 by Edward Schatz, Jr., who previously started Austin Outdoor in Florida in 1994. Schatz grew and eventually sold Austin Outdoor to Yellowstone Landscape in 2008, where he stayed on board as regional president until January of 2015 when Yellowstone was sold to CIVC Partners. After Yellowstone and before starting HeartLand, Schatz said he kept hearing the common theme from other owners that there has to be a better way to do business.
“There’s got to be a way to do this right without overleveraging these businesses and becoming an accounting company that mows grass,” Schatz says. “It still gets back to one simple notion that the landscaping business is local and it’s really relationship driven, especially on the commercial maintenance side.”
That notion has been a guiding force for HeartLand’s approach to acquisitions, both before and after making one.
“I think that you are seeing groups and private equity that recognizes that there is power in the goodwill of local brands, but there’s also power in the culture,” he says.
Deals to be made.
Schatz partnered with a private equity firm, Great Range Capital, and made its first acquisition – Signature Landscape in Kansas City – in early 2016 and later that year added Keesen Landscape in Denver. Early in 2017, he was joined by Bill Dellecker, who came on as chief development officer, and then Peter Welch, as chief financial officer; both had worked with Schatz at Austin Outdoor and Yellowstone. The trio started a string of acquisitions that netted them seven platform companies, plus a handful of smaller acquisitions that the platform companies absorbed. Since forming, the company has made a total of 12 acquisitions.
With that much M&A activity, cultural fit could be a huge undertaking. Schatz says HeartLand does a lot of the legwork before a deal is made to make sure the selling owner is aligned with HeartLand’s. Schatz says he seeks out companies across the central United States in the Midwest that fit in with HeartLand’s ideal service mix of 75% commercial maintenance and 25% winter/ancillary services.
“If it’s not a fit from a cultural perspective for HeartLand, then we just won’t move forward with the acquisition,” Schatz says. “We’ve walked away from a handful of deals.” HeartLand’s senior leadership meets with the owner and the management team to assess the fit and the reasons on why the owner is selling.
“Inevitably, all entrepreneurs at some point usually reach their ceiling and where they’re comfortable at in their business. And sometimes for a platform company that could be $10 million and other times it’s $40 million or $50 million,” Schatz says.
“But at some point, as they continue to invest in their business and grow it, they reach a certain threshold that they’re comfortable with and where continuing to grow at the same pace requires significantly more investment. Usually, it’s greater investment in people.”
People importance.
Once a deal is made, it’s up to the selling owner to determine how to share the news with employees.
“Typically, what we have seen is that owners are usually fatigued by the end of the process with the layers of diligence and financial review that takes place. We call it deal fatigue and it’s inherent in any transaction,” Schatz says. “Post-closing, we give them a few weeks to decompress and say to the management team, ‘You let us know the right time.’ Usually they want to make the announcement internally themselves and they personally want to address their key customers.”
Once the announcement is made, HeartLand makes a presentation to the local management team on what the company is about and what employees can expect after the acquisition. “Most of the time, their concerns are alleviated because it all comes back to managers and employees; they want to understand what the change means for them personally,” he says. “When we say that very little changes post-closing in the way they execute from a day-to-day business perspective, we’ve backed it up.”
Owners will usually stay on a year or two in a transitional role before stepping away. “We don’t want to lose the culture of the business because the owner has changed,” Schatz says. “But for most of the owners, their number two person who was their VP of operations or their COO in some cases, are running those companies now.”
To develop current employees, the company rolled out HeartLand University of Excellence in January of this year. It’s focused on five core courses that have been designed for division presidents, business leaders, operations teams, account management teams and business development teams. Other specialty courses are also being developed. Training takes place at the company’s new headquarters in downtown Kansas City and also using videoconference.
The university criteria were built on years of surveying employees and customers about areas where the company could improve. One common request that came back was a desire for more training.
“It could be as simple as public speaking,” Schatz says. “We’ve got courses designed around account managers engaged in focused client conversations and making presentations; for instance, how to handle when a client puts a project out for bid under various scenarios.”
The trip into Kansas City also allows employees to meet each other and get a feel for the type of culture HeartLand wants to develop, says Rob McDonnell, chief acquisition officer.
“Ultimately, that sort of environment and training strategy lends itself well to enhancing and further creating a culture around all (of our) different businesses,” he says. “It’s an open environment. People stay in touch obviously afterward to share different ideas and strategies around clients and organic growth initiatives.”
Future acquisitions.
Schatz says the goal is to reach revenue of $500 million in 4-5 years. As far as how COVID-19 will affect those plans, he says it’s still too early to know the intermediate revenue implications, but as of mid-April, HeartLand is not experiencing wide-spread service deferrals, scope reductions or cancellations.
One step in reaching that $500 million goal was working with a new investment firm. In August of 2019, the HeartLand leadership team partnered with Westport, Connecticut-based Sterling Investment Partners, who acquired Great Range Capital’s interest, in order to pursue larger growth opportunities.
“One of their key initiatives with us was to bring our M&A in house to develop a team that could handle an aggressive deal flow,” he says.
McDonnell, who worked for BrightView for 11 years, was hired in January to lead the M&A group, which has added a few additional members along with McDonnell. “Rob brings a new dimension to us and we’ve invested heavily in putting an entire acquisition model together and identifying targeted Metropolitan Statistical Areas (MSA) and opportunities within those MSAs across another nine to 12 states, all in similar markets with similar seasons that we have in Kansas City.”
Schatz says HeartLand is looking as far west as Utah and as far east as Pennsylvania. “Not too far north and none too far south,” Schatz says. “If we are capable of growing faster than that, we will, but we’re not going to grow so fast that we put ourselves into a speed wobble.”
Schatz says the company’s focus is to leverage the platform companies to grow organically, and to work more acquisitions at the same time as they recently did with the December 2019 closings on Landscape Concepts in Chicago and Heritage Landscape in Virginia, both with about $30 million in revenue. “It’s really not about increasing the pace or the velocity of acquisitions,” Schatz says. “It’s really about broadening our ability to cover multiple opportunities simultaneously.”
Once again, Kohler is excited to participate in the Lawn & Landscape Top 100 celebration. Each business on this list has shown dedication to the industry, and should be extremely proud of their accomplishments!
Each year brings new challenges, and 2020 has proven to be extremely difficult for both the world as well as the lawn & landscape industry. The COVID-19 global pandemic has impacted everyone on both a personal and business level. We have all needed to adapt to the reality of a “new normal”– and have tried our best to manage our families and businesses to these unprecedented circumstances.
2020 is the 100th anniversary of Kohler Engines and the 147th anniversary of the Kohler Company. Like many of you, we remain a family-owned and family-run business. During these many years, Kohler has weathered its share of challenges. It is truly amazing to see how many of you continue to persevere and thrive during these difficult times. Please trust that you are not in this alone.
Kohler believes it is important to be stewards of our business, employees and communities we serve. It is also important we help our customers maintain a continuity of business. As a partner in the lawn & landscape industry, Kohler wants to reaffirm our dedication to your businesses and your families. We are facing these difficult times together. Whether it is producing face shields, providing mobile showering units, setting up emergency handwashing stations, delivering backup generators to hospitals, building replacement engines or providing timely service parts – we are working every day to make sure you can stay safe and provide for your customers and families.
We’re all in this together. Please stay safe, and once again, congratulations on your success!
Eric Hudak, Director – Product Marketing
Kohler Engines
Responding to the coronavirus
Departments - L&L Insider
Contractors nationwide are dealing with the consequences – for better or worse – of COVID-19. Here's what you told us.
We asked about the COVID-19 pandemic and its effects on your businesses. You responded.
Nationwide, companies are being forced to adjust to unexpected consequences of the coronavirus. Some companies are seeing some surprising benefits, while others are operating cautiously as they fear the worst is yet to come.
Here's some of what you've told us so far:
Paul Rapoza,
president & founder
Rapoza Landscape,
East Falmouth, Massachusetts
Rapoza Landscape is busy.
President and Founder Paul Rapoza said that due to the coronavirus threat, his clients are flocking to their vacation homes earlier than ever before.
“We’re a second home market, so vacation homes,” he said. “We’ve never seen this many of our clients at their Cape homes this time of year. People are trying to get away from it in the cities, so they’re coming to their vacation homes and hunkering down.”
Rapoza said the company has had very few cancellations.
“We’ve experienced people pushing jobs back or putting them on hold, but we’ve also experienced people calling in and we’re still doing estimates,” he said. "We’ve had just as many people sign up for new work.”
Because crews are still 100% operational, Rapoza said the team is being very vigilant about social distancing.
“We implemented all the CDC guidelines for social distancing,” he said. "We’re keeping guys out in the yard. We’re not allowing anybody in our office. We’re not having meetings. We usually have a kickoff meeting in the spring, but we totally scrapped it and said we’ll do it later when everything calms down.”
Rapoza said that while necessary, social distancing measures have been hard on the sales team when they go to give estimates.
“We’re still sending the sales team out,” he said. “We talk to the clients and get as much information as we can over the phone. Then, we tell them we’ll do the estimate at a distance. It’s definitely strange. Sales is all about building rapport with people and it’s awkward to not shake someone’s hand and to stay away from them.”
All of these measures will hopefully keep his crews safe, but Rapoza said having someone contract COVID-19 and spread it is his biggest fear at this time.
“One of the things we worry about is if someone from our team gets it,” he said. “Then they inadvertently expose other team members to it. We’ve always had small teams, but now we’re sending one person in a company vehicle and asking the other person to use their personal vehicle. We’re trying to keep as much distance as possible between team members.”
Rapoza isn’t too worried about any financial strain just yet and says he doesn’t feel it will be worse than the impact of the 2009 recession.
“2009 was tough for us, we were down like 23%,” he said. “I don’t think we’ll be anywhere near that.”
Ryan Panarese,
landscape & snow manager
Constantine Property Management,
Loudonville, New York
Panarese said that while his crews are performing maintenance, he’s hoping to get clarification from state officials in order to hopefully offer the rest of their services.
“We are operational,” he said. “We’re pretty much all commercial maintenance. The state has deemed our services as essential, with some limits. It’s strictly maintenance and weed control here in New York. They’ve pretty much said nothing cosmetic and that’s about as broad as you can be. We’re kind of scratching our heads as to if annual mulching is considered cosmetic or not. We’re still trying to get clarification.”
So far, he hasn’t had any customers cancel jobs.
“All of my customers can still work from home,” he said. “I’ve been fairly proactive with all of our customers and letting them know what’s going on.”
Employees at Constantine Property Management are social distancing, but Panarese said he’s having trouble finding enough sanitation supplies for them.
“All of our trucks have disinfectants in them, and we are wiping all the touch points down twice a day” he said. “I’m still trying to get my hands on hand sanitizer and masks. The guys need them. I told them if they see it, grab it and we’ll reimburse you. Basically, help us help you.”
Panarese said the company has implemented a one person per truck rule, and once jobs get closer to their main office, everyone will direct report.
In addition to finding supplies, Panarese said he’s limiting overtime for now, but expects that will all change once the stay-at-home orders are lifted.
“We’re trying to keep the hours and overtime at bay, but things will hit a bottleneck once things go back to normal,” he said. “As soon as someone says ‘go,’ our clients will ask ‘why aren’t you here yet?’ People will want to be mulched by Memorial Day and definitely by the Fourth of July.”
Before the coronavirus hit, Panarese said crews were already out doing cleanups.
“This was actually the earliest we were ever out in the field,” he said. “We were out in mid-March and were starting to do some light cleanups… and then, we got a late March storm, and we got six inches of snow. Then the virus came into play.”
Until things change, Panarese said everyone will stay cautious and crews will do what they can.
Josh Wise,
owner
GrassRoots Tree & Turf Care,
Acworth, Georgia
On one hand, Josh Wise has watched five customers call and cancel their service specifically because of COVID-19.
On the other, he’s also seen his sales at GrassRoots Tree & Turf Care in Acworth, Georgia, actually grow this year as opposed to last. He said he had a higher cancel rate last season, and in that same time, he had just under 550 new accounts for the first few months of the year. Right now, he’s looking at 900, and he’s nearly got 200 new clients this week alone.
“A lot of people had trip plans, but now they can’t go anywhere and do anything and they’re getting all these refunds, they’re saying, ‘honey, let’s do something with our lawn and landscape,’” Wise said.
He said he acknowledges the severity of the situation: His crews are practicing social distancing, and they’ve changed the way they do group meetings to a larger circle outside rather than sitting around an office. Any shipments to the office are being instantly sprayed with Lysol and equipment is being wiped down more than usual.
“You constantly hear the sink turning on and hands being washed,” he said. “Everybody’s being cautious. Employees are just going from home to work, and from work to home.”
But he’s also remaining upbeat. Among his 28 employees, Wise said he’s told them he’ll be flexible, as one employee who has a weaker immune system is already staying home for the next few weeks. Business-wise, things seem to be humming along. Wise has increased his advertising, too, so more people are seeing his company’s name.
“All in all, things are going really well here,” he said.
John Mueller,
president
Mueller Landscape,
San Diego, California
John Mueller knows it’s a scary situation, and in California, where the state issued mandated shutdowns earlier than most others, coronavirus has been a hot topic for weeks.
Yet after some of the initial concerns over whether his company had enough saved up to survive a long-term shutdown – California considers landscaping an “essential business” because of its safety and sanitary benefits – Mueller said tensions have cooled at his company.
In fact, he’s seen an uptick in sales and job applications.
Usually, the industry-wise labor shortage is so severe that one advertisement might draw a single interested applicant, Mueller said.
But now, with other businesses laying off employees – some temporarily, some permanently – things are going quite differently. He can even afford to be picky with who he selects to join the crews.
“It was extremely hard to find quality help,” Mueller said. “Now, I run an ad, I’m getting more than a dozen a day. ”
His company is a smaller company with two-man crews who practice social distancing as much as they can, and Mueller has stressed to his employees that they not come in if they feel sick at all.
“When the crews get back at the end of the day, we use Lysol and spray down everything in the truck, we do an extra cleaning that wouldn’t normally get done,” he said.
Mueller is certainly seeing some positives from the COVID-19 concerns, but he acknowledges they could be temporary.
“It’s day by day,” he said. “Sometimes, it’s hour by hour. People are being laid off right now by the millions all over the country. We just don’t know what happens next.”
National Hispanic Landscape Alliance set to join NALP
After nine years as NHLA, the move became official in April.
FAIRFAX, Va. – The National Hispanic Landscape Alliance (NHLA) will join the National Association of Landscape Professionals (NALP).
Since 2011, the National Hispanic Landscape Alliance has empowered more than 500,000 Hispanic-Americans employed in the landscape industry in the United States. The Board of Directors of NHLA decided that joining forces with NALP was the best way to advance the mission of NHLA.
“Supporting Hispanic-Americans professionals is critical to the continued growth of the landscape industry,” said NALP CEO Britt Wood. “We need to bring all the nation’s landscape professionals together to ensure that we are working together to shape the direction of the industry.”
NALP will provide NHLA with opportunities for collaboration in policymaking as well as professional and leadership development opportunities.
“We were delighted that the leadership at NALP embraced our suggestion to join forces so enthusiastically,” said NHLA president Mari Medrano. “We look forward, as we become part of NALP, to expanding our reach, doing more to empower the Hispanic American landscape community, and uniting the entire industry.”
FINN products used to help fight coronavirus
The products are being used to disinfect public places like parks, playgrounds, playground equipment and more.
FAIRFIELD, Ohio – FINN’s HydroSeeder products, typically used to disperse seed and fertilizer, are being leveraged to assist in disinfecting public spaces, including playground equipment, parks, benches and more.
“Finn HydroSeeders are being used in communities around the world to help disinfect public spaces. Because they can significantly accelerate the time it takes to sanitize larger areas, these products are serving a particularly important role during this crisis. We wanted to share this potential alternate use of our equipment for public good,” said Matt Hoffman, the vice president of sales and marketing of FINN Corp.
According to FINN, a few ways a hydroseeder may be considered an effective tool for spraying include the following:
The HydroSeeder is designed to spray virtually any liquid. HydroSeeders have been used as an alternative to watering trucks.
The paddle system can agitate or “mix” a combination of liquids and materials with different viscosities. This agitation can uniformly dilute additives in water.
A tower can assist in operating the system from a distance (or a hose for close distances).
The pumping system is effective for spraying liquids long distances.
With a variety of tank capacities from 300-4,000 gallons, Finn equipment can be mounted to a chassis or towed for maneuverability through streets.
Davey Tree acquires assets from Wickes/arborists in New York
For 90 years, Wickes has provided residential and commercial tree services, plant heath care and lawn care.
KENT, Ohio – The Davey Tree Expert Co. has acquired certain assets of Wickes/arborists in Spring Valley, New York.
For 90 years, Wickes has provided residential and commercial tree services, plant heath care and lawn care in Rockland County, New York.
Jim Houston, vice president and general manager, Eastern U.S. Residential/Commercial (R/C) services, said the Wickes office will join Davey’s Northeast R/C operating group. The office will conduct business as Wickes/arborists, a Davey company.
“Clients of Wickes have come to expect experienced, high-quality tree care, and they will continue to see that same level of service as well as benefit from Davey’s broad research and technical capabilities,” Houston said. “Like Davey, Wickes focuses on safety and excellent client experience to achieve success. We are excited for the employees of the Wickes Team as we welcome them into the Davey family and deepen their career opportunities within our organization.”
The new Davey office will be led by former owners James Wickes, who will serve as district manager, and John Wickes, who will serve as assistant district manager. James and John are the grandsons of company founder Ira Wickes, who established the firm in 1929.
Wickes has 22 employees, all of whom will continue employment with Davey.
“Since my grandfather started this company, Wickes has employed safety focused and industry certified arborists, plant healthcare technicians, and lawn health care operators,” James Wickes said. “I am excited to join forces with Davey Tree. We are thankful that we can continue to be passionate about tree care in our region as we grow with Davey.”
Aero Operating rebrands after series of acquisitions
The company is now Outworx Group, which represents the company’s focus on the exterior facilities maintenance market.
WESTBURY, N.Y. – Aero Operating, a portfolio company of Mill Point Capital, announced its acquisitions of Lawn Butler, a Centerville, Utah based landscaping and snow removal company; Groundtek of Central Florida, an Ocoee, Florida based landscaping company; and The Shepherd’s Landscaping, a Belleview, Florida based landscaping company.
Concurrently, Aero Operating announced that it has re-branded as Outworx Group, representing the company’s full-service offerings focused on the exterior facilities maintenance market.
“The completion of these three acquisitions marks a significant milestone in our company’s history and will allow us to offer a more complete set of services to our valued clients," said Daryl Hendricks, CEO of Outworx Group. "We are grateful to the Bori, Larsen and Squire families for their trust in us, and we look forward to building upon the legacies that they have created.”
Outworx Group offers services spanning snow melting and removal, landscaping, industrial sweeping, paving, solid waste and catch basin cleaning.
John Deere produces face shields for health care workers
Production on the protective equipment began April 8.
John Deere has joined a number of organizations and companies across the country in producing protective face shields for health care workers in response to the COVID-19 health crisis.
Employees started production on April 8 at the John Deere Seeding Group in Moline, Illinois. The factory manufactures planting equipment and precision ag solutions for a global customer base.
The company expected to produce 25,000 face shields in the initial stages of production and has ordered materials and supplies to produce an additional 200,000 face shields.
Jose Martinez, an assembler with John Deere
Photo courtesy of John Deere
The first 25,000 protective face shields were delivered to 16 U.S. Deere factories in eight states as well as the company’s U.S. Deere-Hitachi factory for local distribution.
The company is using an open-source design from the University of Wisconsin-Madison for the project and leveraging expertise, skills and innovation of its employee base.
“Our manufacturing and supply management teams, along with our production and maintenance employees, the UAW, and our partners have worked tirelessly to ensure we could lend our support and protect our health care workers during this crisis,” said John May, chief executive officer, Deere & Company. “By working closely with the communities where our employees live and work, we can help support the needs we’ve identified close to home and, as the project expands, address additional, urgent needs across the country.”
The production of protective face shields is one of many initiatives the company and its employees have executed in response to the COVID-19 outbreak. Efforts in the U.S. have included the following:
PPE donations to health care facilities
2:1 employee match program encouraging donations to local food banks and the American Red Cross
Production of approximately 18,000 protective face shields for use by factory employees
Employee volunteerism efforts to sew cloth masks for community members along with a match from the John Deere Foundation for the time invested in this volunteer activity
Launch of a COVID-19 innovations site to share open-source specifications for related projects, including 3D-printed clips to affix face shields to protective bump caps
Ruppert Landscape acquires Scott & Sons
Founded in 1997 by Scott Shubert, Scott & Sons offers services on the Delmarva Peninsula.
LAYTONSVILLE, Md. – Ruppert Landscape has acquired Scott & Sons Landscaping located in Dagsboro, Delaware.
Founded in 1997 by Scott Shubert, Scott & Sons offered residential and commercial landscape maintenance, design, irrigation, pest and nutrient management, and hardscape installation on the Delmarva Peninsula.
“Similar to Ruppert, Scott & Sons invested in owning and maintaining a first-class operating facility and employed a strong team, dedicated to great customer service,” said Tom Barry, president of Ruppert’s landscape management division. “We felt that this would help give us a great base of operations in Delmarva and market-specific knowledge from which to build in the years ahead.”
The transaction includes the purchase of one facility, all commercial landscape management contracts, vehicles and equipment, and the onboarding of all employees. Ruppert will relocate their newly opened Delmarva branch from its temporary facility to join the Scott & Sons team in their facility.
“Ruppert is committed to retaining the Scott & Sons team and all of their commercial landscape maintenance contracts,” said Garth Jorgensen, Ruppert's Delmarva branch manager. “This acquisition allows us to strengthen our newly formed team to better serve our customers and expand our service coverage in this new market.”
Smart Rain makes acquisition
The water management company acquired the Weather Reach and Irrisoft brands from Campbell Scientific.
SALT LAKE CITY – Smart Rain acquired the Irrisoft and Weather Reach brands from Campbell Scientific. Smart Rain has purchased all assets as well as assuming all customer support and services.
Irrisoft is a smart landscape irrigation control business that started in 2001.
The company made the Rain Bird ET Manager, which was private labeled for Rain Bird and sold by Rain Bird for almost a decade. Irrisoft took what they learned and further advanced their product with the Weather Reach Controller Link.
“I am impressed with the simplicity and reliability of the Smart Rain system and look forward to the integration of Weather Reach technology to further improve efficient water use and sustain beautiful landscapes,” said Steven Moore, president and founder of Irrisoft. Dan Hymas, president of Smart Rain said, “We have watched and loved what Irrisoft has done over the years. It was naturally a perfect fit to take all they have built and integrate into our software and smart watering system. We believe both Irrisoft and Smart Rain customers will love even more what is yet to come from Smart Rain.”
Larry Shirk, vice president of Campbell Scientific said, “This is naturally a great fit for Campbell Scientific as well. “We have enjoyed working with Smart Rain and look forward to a long-standing relationship for years to come.”
I’m sure the last two months have felt more like two years for many of you. Reality kinda bites lately, even if you, your family and business are doing fine. So, this month, I’m dedicating this space to some positive thoughts from your peers.
Brian Horn, editor, Lawn & Landscape
We’ve sent out a few surveys to get a feel of how the industry is doing and left a spot for respondents to leave comments about how they are handling the pandemic. Here are just some of the responses:
I believe this has made me a better boss and businessperson. Realizing we all want and need to work but really the health of the employees and customers are the top priority – you sometimes (lose) that thought when you get so busy. Without those two key things, you are not going have a business long.
We have found that since all the stay-at-home orders, our clients have spent time getting a lot of projects around the house done, walking around the yard and noticing things they didn’t notice before. They are far more inclined to make changes or upgrades.
Surprisingly, this is the first time in 30 years I have not seen our industry or at least my business suffer due to this circumstance and turn down (downturn) in the economy. I feel extremely blessed which enables me to help many others.
We have taken a positive attitude and reminded people their yard is one place that hasn’t been cancelled, where fresh air and family fun are abundant. You can read more responses and find the survey results by visiting bit.ly/lawncorona.
Reality kinda bites lately, even if you, your family and business are doing fine.
As you continue to navigate through this year, I’ll leave you with lyrics from a song that I discovered because of a COVID-19 death that seems fitting for the current climate – “Better Things” by the Kinks.
Here’s wishing you the bluest sky/ And hoping something better comes tomorrow/ Hoping all the verses rhyme/And the very best of choruses, too/Follow all the doubt and sadness/ I know that better things are on the way. – Brian Horn
