Ron Edmonds | What You Need To Know About Lawn And Landscape M&A

On this week’s episode of M&A Masters, we speak with Ron Edmonds founder and president of The Principium Group.

The Principium Group is one of the most recognized names in lawn and landscape mergers & acquisitions, or as I say, the of landscaping, one of those niches hiding in plain sight in M&A.

This is an exciting area in the industry, so listen in as Ron walks us through:

  • How The Principium Group joins buyers and sellers to create a more positive experience for both sides
  • Where the biggest demand is in lawn and landscape M&A (and what is driving it)
  • How technology is changing the industry
  • What trends he sees coming for 2022 and beyond
  • And much more



Patrick Stroth: Hello there, I’m Patrick Stroth, trusted authority on executive and transactional liability, and president of Rubicon M&A Insurance Services, a member of the Liberty Company Insurance Brokers Group. Welcome to M&A Masters where I speak with the leading experts in mergers and acquisitions. And we’re all about one thing here. That’s a clean exit for owners, founders and their investors. Today, I’m joined by Ron Edmonds, founder of the Principium Group. For the past 17 years, the Principium Group has been providing M&A advisory services to business owners and investors in lawn care, landscaping and other facility services. One could say the Principium Group is the of landscaping, and talk about niches that are hiding in plain sight. I’m very excited because I never would have thought about this as a specialty in M&A. Ron, it’s great to have here. Welcome to the podcast. 

Ron Edmonds: It’s great to be here, Patrick. 

Patrick: Ron, before we get into the Principium Group, let’s start with you. How did you get to this point in your career, and then we can talk about the focus, but let’s get right as some context for our audience members.

Ron: But like a lot of other people, I’ve my career has taken some paths and turns. And yeah, I’m a CPA by background in college education. I’ve practiced as a CPA with a national firm for 14 years, I guess. And then I was a CFO, for about nine or 10. And that business was sold. And I was, you know, 40. And looking for a new career. Career number three, which is pretty common these days, not too many people like my dad who had one job after the military, around. And I was actually kind of frantic, which seems kind of stupid now. Because I actually thought I was old, and to be hired as in a new company or something like that. And but while I was trying to figure out what to do what I want to do next, I did a little consulting. And I ended up getting a consulting arrangement with a company called True Green Lawn Care. 

Most people have heard that it’s by far the largest company in the fertilization business. And they’re based here in Memphis, where I am and, and they were looking for some skills to work with them on where and making their acquisition process, more effective, efficient, and safer, actually. And they had just greatly increased what they were doing, because historically, they’ve been getting most of their new customers from telemarketing. And that was about the time the no call list had come out. And they had to pivot pretty dramatically. And so I took on this assignment that I expected to last about 90 days, and they were my primary client for close to four years, I still occasionally do some work for them. This 20, 15 years later. But that got me a taste of lawn care and landscape saw a little bit about what dealmakers looked like, and in that industry, and I thought there was a place for somebody like me with my kind of background and personality, and I could make a fit, and it worked pretty well.

Patrick: So it’s amazing how, you know, some adversity or obstacles can create new pathways. So the Do Not Call list comes out. And that’s just the door on a lot of marking and opens up something else. So that’s a great story there. Now, let’s go to the Principium Group and tell us about this. But I always like learning about the culture, you get some insight with companies because you didn’t call it Ronald Edmonds M&A Advisory, you picked Principium. So tell us about the name. And then how you, you know, are focusing here on the lower middle market.

Ron: It’s really pretty funny because I have the opportunity to talk to people about choosing names quite frequently, and actually advise people about changing their name in advance of going through an M&A process sometimes, because in the landscape industry, there’s a real issue with having your name on the door. And people, you know, really focusing on you as the individual as opposed to the business. Now, I gotta tell you, I wasn’t thinking about anything like that. When I named this company. And what really happened was, I had a partnership going that went sour. And a lot of people can relate to that. And a lot of people have had that lesson. I get to see people that have had good experiences and bad experiences with partnerships. But I had a I had to split up and I needed a name and a brand and a website and all those things just as fast as I could get them. 

And I was enamored at the time of Greek words. And, you know, actually went through the dictionary looking at different Greek words that might make sense. And, and this one means, first things or important things. And to be perfectly honest, that was a little bit of a dig at my former partner. Because I thought he had not focused on the important things. And hopefully he’s not listening to this. Anyway, so we picked that name, and we’re able to get get a URL and everything. And they’ve devoted, you know, especially in the early years, and enormous amount of energy into recognition, marketing, on the web, and trade journals and, and email newsletters and all this stuff. And at some point in time, I thought, gee, what a lousy name I picked. And I said, how could you possibly, you know, I don’t know, there’s probably three or four tests of a good name. 

But the first two are, they must to be easy to spell, and easy to pronounce. And this one fails those miserably. And, you know, I’ve started to change the name twice, but was convinced by people in the industry, that that would be ridiculous. Because it has recognition in our niche. And, and, and so we stuck with it, and it and most people in the industry, I think, do do recognize it, both from the level marketing we’ve done. And we’ve also were, we were doing content marketing, when content marketing wasn’t cool. And we’ve got everything we ever wrote on the web. And it’s, we found that you don’t have to spend a lot of money on search engine optimization, if you have all that stuff that’s accessible. And so if you’re going to look for information about about mergers and acquisitions in the lawn and landscape space, the odds are you’re gonna find us.

Patrick: Yeah, I mean, we’ll put this in the show notes. But I did say I was very impressed. Because you’ve got that right there on your homepage. You have two ebooks, private equity investment in landscaping industry as of 2020. And then what you need to know, when selling a lawn care business. I mean, you’ve got your how to’s right there, that couldn’t be more straightforward than anything else. And I think that I imagine landscaping, the industry is unbelievably fragmented. And you’re in the lower middle market, largely because there aren’t that many, you know, 50, 100 million dollar landscaping, or building services organizations out there. 

So there’s, you know, when you’re in that, that lower middle market sector, if people don’t know about you, and what you guys can offer, they’re gonna default to other parties, or competitors, or business brokers or try to get into institutions. And they’re either maybe not being misled, but I think they’re going to be overcharged and underserved. So it’s very important. I’m so happy that you’re here to talk about what Principium Group can do for this segment. But you know, in the early days, okay, you were with that large company. Okay. And then and then you moved on, why landscaping? What did you see that everybody else was missing as an industry.

Ron: I like to say that I am, you know, clairvoyant and forward thinking person and saw that this would boom in a few years. But that’s not true. What I did see was an underserved market, which was clearly underserved, and big and had a lot of transactions going on. That hasn’t been as consistent as I may have hoped, at least back then it wasn’t. You know, it was just booming when I made the decision, and it slowed way down really quick. But we made some changes and broadened our scope, and have made it through pretty well, the, the downturns in M&A in the economy, which are usually in tandem, but not always. 

It’s been so amazing to see the changes over the last 20 years, because 15 years ago, if you remember what was going on politically and in the economy, you know, if you talked about a government shutdown because of an impasse between the White House and Congress, no one would do anything. You couldn’t sell anything. You couldn’t. Yeah, they wouldn’t. They wouldn’t talk about it, they, they certainly wouldn’t sign any contracts. And that seems so trivial now, compared to the kind of tumult that we’ve experienced last few years. And it’s, and no one’s missed a beat. You know, I mean, it’s absolutely unbelievable that we could go through a pandemic that has been as hard and as long as this one and still have the M&A market moving aggressively forward. It is unbelievable.

Patrick: And one other thing is just to clarify this because again, I wasn’t aware of this, but you’ve got residential landscaping, and you’ve got business and commercial landscaping. The larger focus for you is commercial landscaping. And in an earlier conversation, you and I were, were having, I said, well, with the impact of the pandemic, there are going to be fewer and fewer people going back to work. So a lot of these office, you know, commercial buildings are mostly empty. Okay, how’s that going to impact landscaping? What was your response to that?

Ron: If they ever want to lease those buildings up again, they better look attractive and taken care of. And, yes, I think there could come a time when that’s an issue, but not now. You know, drive down the areas where there commercial office parks and office buildings, you’re not gonna see him a mess, or at least not on purpose. You know, they have their challenges right now. I mean, there are a lot of people in the industry that, you know, are really having a real struggle over labor and getting their work done. But it’s not because the clients don’t want it or aren’t willing to pay.

Patrick: Yeah, I we’ve got a number of shopping malls here in Silicon Valley. And a lot of the stores are shut, but the flowers are getting planted. And as you said, we don’t see any weeds growing anywhere.

Ron: Yeah, I’m not sure. I think retail is the best market to invest in. Yeah, I might add it will affect it in time, I imagine. But, but you’re correct.

Patrick: So well talk about real quick on how private equity in this case hit their radar, because that’s kind of interesting on what’s happening there.

Ron: Yeah, it’s, it’s really boomed in an amazing way. And we’ve been following this trend for, I guess, pretty closely for 10 years. And there will be a few deals that actually started publishing this annual survey of private equity activity. And it was a pretty thin report 10 years ago. And it’s, you know, so much, so involved now that it’s hard to keep up with it, it’s too much work to, to put out something like that. We still do it at least once a year. But I think part of it is the general private equity investment scenario in the lower middle market. And for service industries, they love recurring revenue models, and most of these businesses have a pretty big component of recurring revenue. But there’s just I’d like to say it’s really specific to lawn, lawn and landscape, but I’m not sure that’s really true. It’s caught the attention of private equity, but but they’re, you know, people crawling for, for deals everywhere you look, and everybody’s looking for a new idea. And then disappointed when they find somebody else has already figured it out. You have, for example, they are in some of the sub niches in landscape, one of the big ones right now is vegetation management. 

You might not even know what that means, you know. And it’s not, and there’s there’s not trade magazines, promoting that. It’s a little bit easier, harder, to find them. But it’s a great big niche, with with a three, a three and a half billion dollar company and lots of you know, a good number of 100 million dollar companies and, and private equity loves that are looking for those deals. Those companies, by the way, what they do is work with utility companies, for the most part in making sure lines are clear. And so there’s both a routine service. And then when the hurricanes come, they make their real money. You can see the the big long lines of trucks running down the interstate headed in whatever direction that hurricanes caused havoc. And I’m sure I haven’t particularly noticed that with Hurricane Ida, but I’m sure it’s going on.

Patrick: You know, those of us that live out in the suburbs in Silicon Valley where you said we got all the tree care services, would that be considered part of it for for your area? 

Ron: Absolutely. 

Patrick: Okay. Yeah, we’ve got lots of

Ron: That’s another hot area right now. 

Patrick: Okay. Yeah, because we’ve got lots of older trees out here. If the high winds ever kick up, we don’t have hurricanes. But if high winds kick up, but all of a sudden we get powerlines get taken down from a fallen tree. You got to move quickly. So okay, you know, again, this, the more we talk about this, the more I learn about this. Now, you’ve been involved. I mentioned this, you’ve been involved in this industry for 17 years, okay, and I referenced Principium Group as the of landscaping. Let’s talk about what you bring to the table as an advisor because you’ve got a nice Rolodex of not only, you know, potential sellers looking to get bought, and you’re representing them, but you’ve got a great list of buyers.

Ron: We do and we’ve networked and met people for for a long time now. And we use a variety of tools and meet new people. One of the ones that has been the most valuable to us is that that book that we put out on private equity investment in the landscaping industry, because just about every private equity firm that’s been interested in learning about investing in this area has downloaded that book. And the majority of probably, business owners that think they might be a candidate, have downloaded it, too. And so that’s one have been one our huge lead generators, I might add. 

But but we’ve been real active in the in the industry and are willing to talk to anybody. And that’s one of the things I like most about it. You know, sometimes we’re not the right people to help. But we can often aim people in the right direction. But we do understand and have been involved with plenty of transactions, most of them have done pretty well, some have done great, a few have been really challenging. And we’ve got some depth of experience to help business owners get ready for a more positive experience. And we understand what their numbers look like what their businesses are doing and can can explain that to buyers and, and an often, you know, mega deal happen. It’s still, you know, particularly with smaller businesses, identify the buyers are they’re finding where they are, can be a little bit difficult. For larger businesses, the demand is enormous. 

And when I say larger, I mean businesses that are basically at the very end of the lower, lower middle market. Yeah, you know, five to $10 million companies. There’s a really strong demand driven by private equity investment, and looking for add on deals. But that has flown through to other businesses. Most of the larger ones are, you know, not that there’s a lot of ones that are owned by individuals, some are owned by esop’s, that’s fairly common in the industry. Different kinds of ownership formats are out there, all of them are participating in the M&A activity today.

Patrick: One of the areas that the new tool. New relatively, it’s been around for several years, but it only really caught fire last four or five years has been an insurance product called reps and warranties insurance. And the purpose of reps and warranties is to take the indemnity obligation that’s in the purchase and sale agreement, and transfer it away from seller. So seller isn’t liable to buyer anymore and transfers it over to an insurance company. So that in the event of a breach of the seller reps, and that breach leads to a financial loss on the buy side, the buyer doesn’t have to go and try to claw back or pursue the seller. 

They just go right to an insurance company. It simplifies the process, it lowers the temperature in the negotiation, particularly when we get to indemnification, which is near the end. And you don’t have this us versus them kind of conflict. They work together and go and do that is really been a boon for the M&A industry. And I’m just curious, you know, because you are in lower middle market, but you know, good, bad or indifferent without taking my advice on what, you know, rep and warranty. You know, Ron, what’s been your experience with reps and warranties?

Ron: Well, to be honest, it’s been pretty minimal. Yeah, you know, our work is, you know, probably 80% sell side. And it just really hasn’t come up too much. You know, I have been following it, listening to people like you talk a bit for the last few years. And it’s, it’s interesting to me, and I would certainly think it would play a role in some deals, especially as, as if there were products that were available that were focused a little bit smaller deals and what seems to be the case right now.

Patrick: Well, this is why this is an ideal time for us to be talking because as of July 2021, an insurance market called CFC came out with a sell side only product for the real lower middle market. These are companies with valuations of one to 10 million in enterprise value. And you don’t have to worry about a buyer. We’re not underwriting the buyer’s due diligence. The insurance company goes in sends an application to the seller, they fill out just like any other insurance application. There’s no underwriting fee, there’s no underwriting delays. And you the seller does not have to worry about the buyer approving the insurance or not, they just get the insurance and it protects them. 

It’s one of the newer products out there that you know the purpose also for us talking is to make sure that the word about this available new product for this sector of the market that hasn’t been eligible for rep and warranty is now available. And so it’s one of the things that I’m very happy to have out there and I would say that given time, you’re going to see the success of this new CFC is called TLPE. Transaction liability for private enterprise, you’re going to see it grow. And then 10 million enterprise value won’t be its ceiling, it’ll probably start creeping up to 15 to $20 million, in a very short time. So it’s an opportune time to bring it up.

Ron: Yeah, I think that’s gonna be fantastic. Because one of the biggest issues that we work with all the time is fear. And when when sellers look at a transaction, where they’re selling a business they’ve created, that accounts many times for 95% of their net worth. And they look at the ways that that could come back and haunt them. I mean, that they really get really upset and worried.

Patrick: Yeah, and I think it is ideal because on a sell side product, the seller has full control whether or not the insurance is placed. Your traditional rep and warranty policy, you’re absolutely relying on the buyer to to agree to move forward, even if the buyer doesn’t have to pay for it. The seller’s willing to pay for it. The buyer has to undergo diligence. And there are a lot of buyers on the lower middle market that just don’t want to do that. And there’s there’s a good case for that. But it’s nice to have this option. So we’re very proud to be allowed a dynamic market that is meeting these new needs. 

Ron: Now, I want to know more about that. 

Patrick: We will definitely be talking about that. Absolutely. Now, Ronald, as we’re going through this, we’re nearing the end of the pandemic, and in the Delta variant and so forth. We’re, I mean, 2021’s closing rapidly going into 2022. Give us a picture. What trends do you see either macro in M&A or specifically for your, your segment?

Ron: Well, there certainly are a lot of people out in the market right today, who are fearing capital gains tax rates, which, no matter what we in some fashion, we’re probably gonna see, there’s hard, it’s hard to imagine scenario where we’re not going to see some tax increases. Whether they’re going to be the magnitude that the administration has proposed, I don’t know. But a lot of people assume that they will are trying to plan for that. Of course, what they can’t plan for is wins when a tax might be enacted. A big assumption that might be whether it’s actually enacted before or after the end of the year, it might be effective at the end of the year. So there are quite a few people trying to get deals done before the end of the year. It’s really too late to get started for 99% of potential sellers to get there at this point. But that hasn’t caused a drop off in interest. 

There’s lots of activity in our sector and lots of other sectors. And you know, I can see next year being is probably as big a year as this one. Barring some sort of economic event that would that would stop it. It’s beginning to feel, of course this makes me feel potentially stupid. But it’s beginning to feel like there’s it can’t be stopped. Because or the economy is structure itself. And we’re where the money comes from. There’s so much money that needs to be invested, of course, that might change of interest rates rose dramatically, or something like that. But right now, there’s a lot of pressure to get deals done. And that’s been favorable to sellers, because prices have have been pretty, pretty nice. In our segment. We have a lot of people that are, you know, retirement age, the baby boomer sell off of businesses that were built by baby boomers is feels like it is becoming a reality. Yeah, people have been talking about that for years now. 

Of course, the baby boomer generation is pretty big, that you better get out while the getting’s good before everybody else gets the good deals. I suppose or some might be some truth to that. But I don’t think a lot. You know, in the consolidating industry, it’s fascinating. There’s been all this activity in landscape over the last, especially the last five years. And you know, you really have to look pretty hard to see the impact of it in terms of the industry as a whole. Private equity firms asked me if the industry is picked over. No, you know, it’s a regenerating thing. There’s always new companies going in. You know, and I noticed not long ago in some studying I was doing that, despite all the transactions that have happened, the size you have to be to get into to be one of the top 100 landscape companies in the country is not going up every year. It’s not that much bigger than it was five years ago, and one year it went down, even though industry revenues were up. 

And there’s new young people, leading businesses and, and and creating new things. Yeah, it’s nowhere near all picked over. And that’s before you can start start looking at some of the new things that are happening. Yeah, you know, there’s no doubt this industry is having as big a labor crisis as anything other than perhaps restaurants. I mean, there’s some similar reasons, and some of them are different. But it’s a it’s a big problem. So, you what we have today, we have people really seriously looking at things like robotic mowing.

Patrick: Ron, would you say that you know, if somebody wanted to try to get a deal done before year end, the seller? Could they come to you? Is it possible to pull something off?

Ron: It’s possible if they’re the perfect candidate. And highly desired one, are there people out there like that, but, but it would be it would be a big challenge. I you know, I would talk to people and, and make an assessment of what the best opportunity is, but, but it would, it’d be pretty tough.

Patrick: Ron, how can our audience members find you?

Ron: Back to words you can’t pronounce and can’t spell but our website is That’s p r i n c i p i u m And my email address is

Patrick: And I would tell you, ladies and gentlemen, if you wanted to get established as an authority, it’s always nice to have written the book in a particular discipline because if you wrote the book, you’re sharing your knowledge with the community and the community should come to you for all of that. And you have that like you said. You’ve got two books on your website, they’re ebooks, you can download immediately. I strongly encourage them. Ron, thanks for your generosity there with the community. And thanks for being guest today. It was just a real pleasure talking to you. 

Ron: Well, thank you for having me on. I’ve enjoyed it very much. I wish you the best.


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