BUSINESS GROWTH
Buyers interested in your company as an add-on could be independent strategic buyers , such as public corporations or other founder-owned businesses . Or they could be private equity-backed strategic buyers looking to add on to a platform investment . These buyers may be motivated by revenue accretion , cost synergies or a combination of the two .
Before considering an offer from either type of buyer , think carefully about your transaction goals . Are you looking to retire ? Are you hoping for meaningful or full liquidity so you can diversify your assets ? Do you want to preserve the legacy you built ? Do you have major growth plans for the company that require significant capital or other resources ? Answering these questions can help you determine which buyers align with your goals .
By Cole Jackson
Many landscape company owners pursue the strategy of growth via acquisition . Whether you are considering this strategy for your business or have been approached by a larger company looking to acquire your company as an add-on ( also known as a bolt-on acquisition ), the process may seem like a black box — complex and unfamiliar .
As a private equity firm with investments in the landscape industry , our goal is to demystify the acquisition process . The following are some considerations for evaluating potential buyers , as well as information for those of you wishing to pursue add-on acquisitions for your own company .
Being acquired
When evaluating potential buyers for your company , it is important to understand whether a buyer is viewing your company as a platform investment or as an add-on acquisition . While much of the acquisition activity in the industry is focused on the latter , some buyers ( typically financial buyers ) may be looking at your company as the basis for a larger consolidation or roll-up platform .
Platform investment Typically , buyers viewing your company as a platform investment will want you to continue to run the company ( or already have a solid succession plan in place ) while they also offer significant liquidity and accelerated business growth . Buyers proposing to acquire your company as an add-on can provide meaningful or even full liquidity along with access to more resources . Founders are typically able to fully retire post-transaction .
If acquired as a platform investment , you may keep more operational control and have a larger voice in future decisions ; you ’ ll likely have a board seat if the buyer forms a board of directors post-closing , for example . There is typically more flexibility for the structure of the deal , such as the percentage of ownership you ’ re selling ( for example , if you are only interested in growth capital for a minority stake ). Thinking about your employees , the buyer might want everyone on your team to stay in place to ensure the continued success of the business . Lastly , for financial buyers , there is usually a second , later exit . Many owners who retain some partial ownership of the company ( also known as rolling equity ) will have the opportunity to get a bigger “ second bite of the apple ” when the investor sells the company to a future buyer .
Add-on acquisition When your company is acquired as an add-on , you ’ re less likely to have the ability to roll equity . Depending on the structure and size of the buyer , you may not have a board seat , and you will likely have a boss if you continue to work at the company after the deal . This can be a difficult transition if you ’ re used to working for yourself . It ’ s also critical
26 OPE + May 2024 www . OPE-Plus . com