As Released July 1, 2014
Brickman Group Press Release
“The Merger completion on June 30 of Maryland based Brickman Group, Ltd. LLC and California based ValleyCrest Companies, LLC creates the industry’s largest-leading landscape Services Company”.
For months, we have all been waiting for this day to arrive; the finalization of the BIGGEST merger deals in landscape Industry history. In my opinion, it has only just begun… Not only for the combined entities, but also for the industry at large. It is now time to see how it all will come together and if it will work as planned. While many industry professionals have their opinions, this article is nothing more than me sharing my thoughts as a landscape-snow industry veteran.
That said; first, I want to address ‘Post-Merger Integration’. This is what happens now that the deal is done. Post-merger integration is the foundation of how it all comes together depending on the operational plan discussed between the executives of the now combined entities. Following a merger, management is typically under time constraints to address challenges such as defining strategic integration priorities and identifying synergies of the now combined entities. The post-merger integration (PMI) process presents not only several crucial questions, but also specific operational execution related issues. Can they make it happen given a majority of mergers and acquisitions fail to achieve their hoped-for benefits? Some M&A experts put the success rate of mega-mergers at less than 20%.
I challenge these questions,
1. What will the combined entity look like, what will its name be? In addition, what will the brand represent? (needs to relate to more than 150 years of combined experience)
2. How does the combined entity ensure they are incorporating the key success factors for PMI?
3. What functions must they integrate quickly, and how do they focus on realizing a balanced level of synergies between two similar green industry companies?
4. How do two companies with distinctive (different) cultures best integrate to minimize and deal with potential cultural conflicts between them?
5. How do the combined entities keep employees focused on business at hand and customers confident, satisfied and retained during the integration process?
“There will be an immediate need for the entities to rationalize, streamline, and eliminate duplication in the service delivery process in all markets which will drive the early months of post-merger integration process. The value of the deal will only increase after the potential of the new company yields greater value to its shareholders. Like with any business integration of this size, it is one thing to design a new business architecture and operational relationships on paper, it’s quite another to bring them to life”
It is my opinion that these are two different companies with a proven set of best management practices, organizational systems and processes and managerial framework. If the post-merger integration fails to collaborate on a true shared vision, the integration will lack direction, and more importantly execution whereas affecting not only the stakeholders of the companies; employees will lack motivation, productivity will fall, customers will be frustrated, investors will lose confidence in the company due to the uncertainty about the future direction of the combined entities. With the lack of a proper vision, the firm is neither able to retain nor attract employees. All these factors can lead to an acquisition failure.
It is my opinion that the true success of this merger depends largely on how well management can persuade constituencies to believe in a unified vision and how well they act to bring it all together. This is a communications task, pure and simple. However, it does not just happen. It must be planned, controlled and carried out with commitment.
Opportunity ‘YES, YES, YES’
It is my opinion it is time for great opportunity. This merger creates boundless opportunities for the smaller landscape company and the larger regional company who is looking to grow. These companies must understand the complexity of the merger of these two national players and former rivals in order to leverage market opportunities.
Both companies will have loyalty from certain companies, but other clients, particularly the smaller regional client will have concerns. You have to remember, some clients that liked Brickman, perhaps did not like ValleyCrest. Clients that perhaps liked ValleyCrest might not have liked Brickman. Then there are the clients who are tired of the ‘nationals’ all together.
This is where the opportunity lies.
OPTIONS FOR GROWTH: New talent availability, people will become available through workforce integration.
OPTIONS FOR GROWTH: Market expansion through expanded opportunities.
OPTIONS FOR GROWTH: Strategic partnerships, co-branding, working with other complementary non-competing companies.
OPTIONS FOR GROWTH: Merger & acquisitions, great time to buy small companies to help expand your brands or time to prep your company for sale as other acquisitions will occur at the regional level.
Assess Which Growth Option Best Suits Your Business
While opportunities will be abound for companies at every level, it is a new time in the green industry. You will be seeing many smaller companies growing, larger regional companies making acquisitions and I do believe that a new ‘National’ will be born in the next 3-5 years.
To choose the best strategy for growth, you will need to undertake an analysis of your business’ current performance. Once you have carried out the review, focus on the option that looks the most logical for your business model.
Looking for a good book on the subject, suggested reading;
- The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It Paperback – by Michael E. Gerber