Should Landscape Business Owners Buy the Stock?
Lawn and landscape business owners across the USA will soon have the option to look deep inside the financial results of the industry revenue leader…and in some cases… their biggest competitor. It doesn’t matter if you own a multi-million dollar landscape company or a mom and pop operation. Your opportunity for access is just a few hours away.
By the evening of June 27, 2018, the initial public offering of shares of Brightview will be priced by investment bankers working the deal. On the morning of June 28, 2018, the “public” has the option to buy the shares of this company on the New York Stock Exchange. Should you buy the stock?
Here’s a little background information that may help you decide.
It was 20 years ago this month (June 4, 1998) that the former Landcare USA (GRW) went public on the New York Stock Exchange. The share price was $8 and they raised approximately $40 million. Here’s what happened after that IPO of a lawn and landscape company.
That IPO kicked off an aggressive roll-up of family owned lawn and landscape companies across the USA turning local landscape business owners into millionaires faster than a zero-turn lawnmower can cut an acre of grass. How and why did this happen?
First, the “How It Happened”. Seven well established owners of multi-million dollar landscape firms gathered their collective assets under the tutelage of an educated investment banker. This merger of seven privately owned companies created a gross revenue stream over $100 million dollars per year. When the proceeds of the stock sale were deposited into the checking account of Landcare USA, they went on a buying spree unlike anything our industry had ever seen.
The lessons learned by the attentive lawn and landscape business owners two decades ago have shaped the wealth accumulation strategies of savvy lawn business owners ever since.
If you want to get rich in the landscape industry, build a multi-million-dollar business with reoccurring revenue from multi-year maintenance contracts. Then do everything you can to increase revenues, improve productivity and lower costs. If you’re able to generate profits, the public company has access to lots of money. They can buy you out, quickly unlocking your equity and injecting your bank account with cold hard cash!
Next, why did these buyouts occur? One reason. It’s faster to grow revenue via acquisitions than via organic sales. Public markets reward companies with high rates of revenue growth with higher stock prices. Even though the Landcare USA event was 20 years ago, the rules of money remain the same. You can expect a growing number of acquisitions in our industry!
Should lawn and landscape business owners buy the stock of Brightview (BV)?
This event marks a tremendous accomplishment for the current owners of Brightview. Congratulations to the BV founders, investors and debt holders!
Please consider this. This is a significant event for ALL owners of lawn and landscape companies across the USA for two reasons.
First, if you own a commercial lawn maintenance company, generating a few million dollars in revenue and you are located in an “A” market, you’re exit opportunities just got better! They got better because the new public money player will likely begin to acquire financially healthy companies. When public money is on the table, it’s very likely your valuation will be higher with Brightview as a public company. Can you say cha-ching?
Second, if you don’t own a multi-million-dollar commercial lawn maintenance company, there’s still significant upside for you. If you purchase stock of a publicly traded company, you have the right to review all public financial reports and attend stockholder meetings. If you buy the stock and take advantage of the opportunity to attend stockholder meetings, you’re bound to get smarter as you learn from the public company. You’ll be able to compare your own company’s financial results to that of a publicly traded company providing similar services. That’s pretty cool!
Some of you will end up buying the stock because you sold your company and took stock as payment. Some of you will buy the stock because you like the idea of looking deep into the financial performance of your competition. But I hope you buy the stock with the idea that you can benchmark your lawn and landscape company financial performance against the big boys…and beat them!
I cheer for the underdogs. The under-educated, the under performing and the underrated are my friends. My dream is to help the independent lawn business owner profit greatly with a family owned business serving local customers. No public money needed!
However, I’m excited about the idea of a publicly traded lawn service business in this economic cycle. This will attract a tremendous amount of attention to our industry. It will create wealth for owners of lawn companies at a faster rate than we have seen in the past 18 years. But most importantly, this event will prove to young people who might be thinking about a career in the lawn and landscape industry that huge opportunities are out there… in the landscape.
Happy landscaping!
Tony Bass is the founder of Super Lawn Technologies. He is the co-author of The E-Myth Landscape Contractor: Why Most Landscape Companies Don’t Work and What To Do About It. You can contact Tony at Tony@tonybassconsulting.com or 478-822-9706.