M&A advisor Jeff Harkness says snow and ice management has many strengths, which make it an intriguing bet for investors from both inside and outside the industry. So, maybe you should take those cold calls about a potential merger?
Despite lingering uncertainty due to COVID-19 and a lagging global economy, last year was a record year for M&A activity. On a global level, 2021 saw more than $5 trillion in global M&A volume, according to some estimates, which surpassed prior records. Closer to home, high-equity valuations in the US, coupled with low interest rates, created an enticing M&A environment that has extended into 2022. While this year may not be another record year, financial insiders anticipate the key elements will remain strong for the M&A market.
This is a trend seen not only in the snow and ice management industry, but throughout the green industry, as well. We reached out to Jeff Harkness, the managing partner of Atlanta-based Three Point Group (3PG), which helps guide snow and landscape companies not only with the M&A process, but also succession planning, business valuations, and securing strategic capital resources for growth. He has also served as a past ASCA Executive Summit guest speaker and educator on the M&A market and how it impacts the snow and ice industry.
It should be noted, since green industry professionals who do snow and ice in the winter, or snow and ice professionals who provide lawncare and landscaping in the warm-weather months, comprise nearly 70 percent of this industry, when we mention “the industry” in our conversation we’re often referring to both entities as a single group.
Depending upon market pressure and the amount of financial bandwidth companies have to act, contractors can take advantage of either an offensive or defensive strategy in an approach to M&A. According to Harkness, the economic environment and significant capital resources still are in play for 2022 and 2023, allowing owners to consider growth through a strategic acquisition, or entertain a merger with another company or private equity partner. Size and scale matter so an infusion of capital and market expansion can solidify a long-term market position.
In our conversation, Harkness walks us through the state of the mergers and acquisitions for 2022 and explains why our industry is so attractive to investors, why M&A is an important growth tool, and why it’s so critical for snow and ice professionals to establish a long-term vision for their companies.
