San Francisco-based Embarc Advisors is a group of 17 people who work to assist business owners who are looking to sell their companies. In recent years, the company has become more active in the landscape and lawn care industry.
Landscape Management spoke with the company’s founder, Jay Jung, who is a former Goldman Sachs investment banker who has completed over $500 billion in transactions, including the sales of Yahoo!, MuleSoft and SanDisk. As Jung says, “I’ve sold coal mines, chemical companies, renewable energy, software and internet companies. I’ve found that M&A is M&A.”
LM: Why do you think the landscape and lawn care industry has become so attractive to private equity investors?
Jay Jung: If we take a step back, I would say private equity is most active in industrial companies. That’s really where the U.S. economy grew, and industrial companies were always viewed as having some hard assets, whether it’s a factory or machines, and there’s generally some trade secrets or IP that make them unique. So, private equity is very active in manufacturing businesses. More recently, let’s say in the last decade-plus, there’s been an increasing trend toward service businesses. Historically, service businesses were not as attractive to acquirers because it kind of felt like there’s no entry barrier. They think anyone can open up a shop and start doing landscaping. They’re undifferentiated. But I think what people are coming to realize is even these businesses, what seemingly might look undifferentiated on the surface, when you dig in, there is differentiation. In the last five to 10 years, we’ve seen a lot more activity in just regular service businesses, including landscaping, because I think buyers realize that as long as a business has reoccurring revenue, there is a system in place that helps the company continue to grow. There’s an opportunity.
LM: What do you advise our readers who get a phone call, and on the other end, it’s someone asking about their interest in selling their company?
Jung: I think the first thing is to listen, hear them out. It’s very exciting. And if someone makes an offer, you almost feel like you have to react on the spot, but you don’t. You don’t have to rush into it. Listen to them, hear them out and then you have to get the right advice. And I find that a lot of business owners might go to their CPA, they might go to their real estate lawyer, they might go to their cousin or uncle. But I think it’s really important to get advice from a real M&A advisor who only does M&A, day in and day out. Because the thing about selling your business is that it’s a once-in-a-lifetime event. It’s like harvesting the fruits of your labor, only it took 10, 20, maybe 30 years to grow the fruit, and now you have one shot at harvesting it. It’s an irrevocable act, and you don’t get do-overs here. And I’ll say any M&A advisor that’s worth half their salt will provide consultations at no cost. So don’t be afraid to seek advice and help and talk to a variety of people because you want to find the right person.
LM: What is one bit of advice you give your clients to make sure they get the best deal possible?
Jung: If you look at landscaping, it looks like everyone’s doing the same thing. But when you look under the surface, and you tell a story, everyone’s been building their business for 10, 20, 30 years — they’re doing something right. For small businesses, the failure rate is catastrophic, but if someone survived for 20-plus years, they’re doing something right, and I think it’s important to tell the story of what they’re doing right and what they’re doing well to really let their business shine.
LM: If you look into your crystal ball, how do you see the rate of mergers and acquisitions going forward over the next several years?
Jung: There are multiple databases, but there’s one database that a lot of middle-market private equity firms use to source deals. When I go in there and query for landscape management companies, I see about 60,000 businesses… I think the peak years of 2021 to 2023 it was less than 100 deals per year. I think about 10 years ago, say like the 2013 to 2015 timeframe, it was less than 20 deals per year. It was more of a neglected, under-the-radar industry. And I think it’s getting more and more attention, and we’re getting inbounds from private equity firms saying that they’re interested in facility management businesses, including landscaping. I wouldn’t be surprised if landscape owners start getting calls from private equity firms saying, ‘Hey, do you want to sell?’ I think it’s going to be an exciting sector going forward.
