Subject: Green Merger News - A Look at Search Funds


October 2018
888-229-5740
Edited by Ron Edmonds

A Look at Search Funds
To our clients & friends:

In this issue, we examine search funds, a topic that is of growing interest in business sellers and has begun to have some impact on the lawn and landscape industry.  You may hav received an inquiry from a search fund and wandered what it was all about.  We will fill you in.

We are getting ready to head to Louisville next week for GIE+EXPO and Landscapes 2018.  We hope we will see you there.  If you'd like to schedule a time to meet, let us know.

As always, if you are ready to discuss the sale or acquisition of a lawn or landscape business, we would welcome the opportunity to talk.  Give us a call or email.
Regards,

Ron

Ron Edmonds
901-351-1510
ron@principiumgroup.com

Meet Us at GIE+EXPO and Landscapes 2018
We will be in Louisville, Kentucky, October 16-19 attending Landscapes  2018 and GIE+EXPO.
These are always great networking events and we hope you will be there too.
If you'd like to meet up in Louisville, contact us or click here to schedule a meeting.


 A Look at Search Funds
Many of our business owner readers have been contacted by potential buyers who typically indicate they are searching for one company to acquire and operate.  I have many clients forward emails like that to me.  As  M&A advisors, we are typically contacted by several of these groups every week.

These potential buyers are known as search funds.  Search funds have become a popular investment vehicle in recent years. We thought it might be helpful to provide business owners some information about what search funds are all about. Much of this information is adapted from searchfunder.com, an online community serving the search fund world.

A “Search fund” is an entity set up for the acquisition of a single business. Search fund principals move from dealmaking to operating roles once an company is bought, usually becoming CEOs. The search for a successful acquisition usually lasts 2 to 3 years.

Many credit the search fund model to H. Irving Grousbeck who funded the first searcher in 1984. Today, searchfunds as an asset class are growing rapidly due to a very active investor community evangelizing the model at top MBA programs around the world. Most top business schools now have classes dedicated to “entrepreneurship through acquisition”.

In a traditional search fund, searchers will raise capital from a group of investors to look for a company within a geography. These investors have the right of first refusal on any deals. Searchfunder.com estimates there have been 627 traditional search funds, of which 198 are currently active.

Self-funded funds  are managed by searchers who finance their own search efforts and only look for outside capital when a deal is found. The terms are negotiated on a deal-by-deal basis.  Searchfunder.com estimates there have been 155 self-funded search funds, of which 94 are currently active.

In a single-sponsor search fund, searchers raise search capital from a single source rather than from a group of investors, sometimes even co-locating with their investor. Searchfunder.com estimates that there have been 41 single-sponsor search funds, of which 22 are currently active.

It is hard to be on top of the entire search fund universe, but we believe that there are have been four search fund investments in the landscape industry to date, Botanical Designs in Seattle in 2018, The Wright Gardner in northern California in 2017, CityLeaf in San Francisco in 2016 and Nature Care Services in Los Angeles in 2014.
Recent Transactions
Here is a recap of recently reported merger & acquisition transactions  in the lawn and landscape industry:

Five G Capital has invested in The Perennial Companies, a provider of landscape services, exterior property maintenance and snow plowing in the Midwest.  More information.

Juniper Landscaping has acquired Prestige Property Maintenance, which operates in Dade, Broward and Palm Beach Counties. Juniper is a portfolio company of ZS Fund.  More information.

The Dwyer Group, the franchisor of The Grounds Guys, Countrywide Grounds Maintenance and many other service brands has changed its name to Neighborly.  Neighborly is a portfolio company of Harvest Partners. More information.

Sweden’s Green Landscaping has acquired the Trädexperterna AB Tree Care Business.    More information.

In the U.K. Practicality Brown has acquired the commercial business of Midland Tree SurgeonsMore information.

Exit Planning Tools

Get Started with Exit Planning
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Find out by taking  a brief online questionnaire to receive an immediate Value Builder Score of between 1 and 100 for your business. You will also receive a 26 page report full of charts and graphs that will give you insights into how buyers evaluate your business.
Do you understand the value of your business?
Understanding the value of your business is a key step in exit planning.   We offer cost-effective valuation services which help you understand the value of your business and the factors that drive that value.
About The Principium Group

The Principium Group provides advisory services related to mergers & acquisitions and exit planning to lawn, landscape, and facilities services businesses. Our professionals have assisted business owners in hundreds of transactions. For buyers, Principium provides assistance and counsel in strategic planning, identifying potential acquisition targets, due diligence and planning for successful integration of acquisitions. For sellers, Principium provides assistance and counsel in evaluating strategic alternatives, identifying and negotiating with potential acquirers and assisting with transactions from due diligence through the closing process. In order to provide the highest quality service, we maintain relationships with other professionals serving the green industry and can access those professionals to supplement our internal resources. No matter how large or small your business may be, we have the resources to serve you well. We understand that the decision to buy or sell your business is a profound one, and we pledge to work with you in a professional and confidential manner while we help you navigate this often confusing process. Whether you have immediate plans to buy or sell a business or may sometime in the future as part of an exit planning strategy, we would welcome the opportunity to talk with you about your business.

Principium Group
P.O. Box 414
Cordova, TN 38088
888-229-5740

Ron Edmonds
901-351-1510
ron@principiumgroup.com

Chris Martin
BRE #01966513, LICENSED IN CALIFORNIA
888-229-5740, ext 103
cmartin@principiumgroup.com



Notice: 
The information included in this newsletter is derived from publicly available sources. Our intent is to give a perspective on the industry taken as a whole. The inclusion of a transaction in this newsletter does not imply that The Principium Group acted as an advisor to either of the parties to the transaction. It is the policy of The Principium Group always to maintain the confidentiality of its client relationships. For those transactions in which The Principium Group did play a role, the information included herein is still limited to that available through public sources.
Principium Group, 763 Walnut Knoll, Suite 6, 38018, Cordova, United States
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