On the heels of the announcement that the two largest companies in the landscape industry will combine, the CEOs of Brickman and ValleyCrest spoke with Lawn & Landscape Editor Chuck Bowen about what the industry can expect from the new company.
Andrew Kerin, CEO of Rockville, Md.-based Brickman Group, said the combined company would remain focused on the landscape and snow industries.
“We collectively are completely committed to the landscape and snow services industry and business we have today,” Kerin said. “We see a lot of room for growth, a lot of room for professional development, a lot of room to continue to shape the industry and the professionalism of the industry.”
Kerin also stressed that private equity group KKR’s acquisition of a majority stake in ValleyCrest is a merger.
“I want to be very clear about this: This is not the new Brickman. This is Brickman and ValleyCrest coming together as a merger of equals to create the next generation company,” Kerin said. “We believe we are better together and that is capturing the best of both.”
Kerin came to the Brickman Group in 2012 from Aramark Global Food, where he was group president. Before that, he was vice president with facility services firm Ogden Corporation.
The deal, expected to close in a few months, would have KKR purchasing a majority share in Calabasas, Calif.-based ValleyCrest Landscape Cos. from MSD Capital. Combined, the two landscape firms will have nearly $2 billion in revenue and cover every major U.S. market. MSD and the Sperber family would maintain stakes in the new company, and Richard Sperber, son of ValleyCrest founder Burt Sperber, will no longer serve on the board.
“We’re in a really neat period in the industry where the industry is growing, and people are investing in their landscape, they’re improving to a greater extent, so the timing of this is excellent in the sense that we’re in growth mode, there’s plenty of work out there and customers are more interested than ever in improving their properties,” said Roger Zino, CEO of ValleyCrest.
Kerin said he sees growth potential in many segments.
“The short answer is we see it everywhere. We see it in design, we see it in building, we see it in the maintenance, we see it in being able to expand trust relationships by adding more service and more properties for those clients,” he said. “And we’ve also found that we have a lot in common in terms of how we approach the market, so we have greater strength collectively than we had before. That being said, we have a relatively small share of the market since the market is so large and fragmented.”
Brickman ranks second on the 2014 L&L Top 100 List, with $900 million in total revenue. ValleyCrest ranks first, with $992 million in revenue. Combined, the companies have 22,700 employees. Brickman grew by 9.6 percent last year, and ValleyCrest grew 12.7 percent.
Even with revenue of nearly $2 billion, the combined Brickman and ValleyCrest would still only represent about 3 percent of the landscape industry’s total size.
The two companies, while very similar in many aspects – their large commercial maintenance footprints, most notably – aren’t identical. Brickman has long dominated the snow and ice management market. In 2013, it reported more than $172 million in winter revenue, compared to ValleyCrest’s $29.5 million.
And ValleyCrest has a long history in the design, construction, golf and nursery businesses. It also operates a separate national commercial maintenance franchise arm in U.S. Lawns, which ranks 9th on the Top 100 list with revenue of more than $195 million.
Kerin said those business units of ValleyCrest will remain in place, and that the two companies will draw on each other’s strengths to grow.
“If you go to the beginning of this question about a perception of difference, I would focus more on what’s common, and that’s what we have been able to do and that’s why we’re so excited about what’s in front of us,” Kerin said. “For us, you start with the legacy of two families that clearly shared a great passion for the industry, a great passion for the work, and for people, a passion for clients and people, and that’s at the core.”
Zino also said the two companies have more in common than not.
“There’s a lot of perceptions out there, but we focus on the reality and the reality is as two teams have engaged, we have found a lot of common ground,” Zino said. “We have a great passion for the landscape profession. And we share a just a real pleasure in what we do for a living in make the world beautiful for our customers to live work and play in. That’s a common element of the two companies that’s been very unifying.”
Joseph Hillenmeyer had a distinct vision of what his landscape design firm could become — how it could flourish with a veritable plantsman at the helm, the designs that could be executed with a fine designer’s eye — but there was one problem. The multi-tiered business, with in-house gardeners performing maintenance and three installation crews of subcontracted specialists in masonry and more, was a complete stress and a real drag on his creativity.
Hillenmeyer had grown a successful full-service landscape design/build firm, which he acquired from his father in 1990. “I was raised in a business where it was a growing operation — there were 30 installation crews and probably the same amount of maintenance crews, a garden center — everything you could do in the green industry, that family did,” he says.
But Hillenmeyer didn’t want to do everything. He struggled with the decision for probably about a decade before, three years ago, he eased out of installation and maintenance so he could operate a dedicated landscape design firm. He connects clients with a list of high-quality subcontractors who do the work, and he manages the projects. But, he is not directing their work. He’s not tied up in who showed up late to the jobsite and the litany of other operational issues associated with employees.
“You make the best decisions for yourself and your business, and so I removed my ego from this because I didn’t want to say [installation] is not something I’m great at,” says Hillenmeyer, referring to running a full-service firm. “I’m not good at making sure the trucks get their oil changed and managing people — this is not how I want to spend my time.”
Coming to terms with what he truly wanted versus what he felt he should want for the company was a real challenge. That’s why he waited so long to focus the business solely on design. “I had to get over the fact that the [multi-tiered] business model just wasn’t me,” he says. “It was not what I enjoyed. I fought it — but I should have made the change 10 years ago.”
Hillenmeyer says he probably spent a few years trying to sell himself on the idea that dropping installation and maintenance was the right decision. But once he did, from a passion and profitability standpoint, he has never looked back.
“This has allowed me to focus on my passion for gardens,” he says. “There are [construction] issues that play into my reality but it’s not my responsibility, so I can focus on working more closely with my clients, spending time designing projects and expanding the breadth of where we are working.”
Transitioning to design only
For Hillenmeyer, the green industry family tradition runs deep — back to the 1700s in France and Germany. He can trace back nine generations. Hillenmeyer’s great-great-great grandfather, Francis Xavier Hillenmeyer, came to America in 1838 after horticultural training at the Baumann Brothers Nursery in France and set up shop in the Lexington, Ky., area.
“[Horticulture] is a great way to make a living, but it’s a very difficult way to make a living if you don’t love it,” Hillenmeyer says, explaining why he chose to focus on design and plants rather than installation and landscape after-care. The “maintenance” division at Hillenmeyer was really more of a troupe of fine gardeners, and there were eight on staff.
Hillenmeyer transitioned out of maintenance gradually, over the period of a year, eventually training a young man who wanted to start his own garden maintenance company. “I turned [over] all of my existing accounts and send my current project maintenance to him,” he says.
As for easing out of installation, this too was a gradual year-long process of trimming back the crews. There were a dozen full-time construction employees — the company was 20 strong before Hillenmeyer shaved the staff down to a solo operation — and he whittled install down one crew at a time, while bringing on subs from the companies he was already working with. Six of his former installation employees eventually went to work for companies Hillenmeyer subcontracts with today. So, in essence, he’s working with many of the same faces on the job site.
This complete business shift changed the financial picture at Hillenmeyer Landscape Design — but for the better, from Hillenmeyer’s perspective. The company is significantly more profitable today because he held on to the materials side of the installation business. Hillenmeyer still specifies and sells plant material, which is drop-shipped to job sites. “So, I’m not holding and maintaining plant material while I wait for it to go somewhere,” he says.
Hillenmeyer’s subcontractors are paid directly by his clients, who might write seven or more checks for a job: one to a mason, another to a landscape lighting professional, etc. They’ll write a check to Hillenmeyer for design services, plus a 20-percent markup on those subcontracted services as a management fee. “This has totally changed my gross income,” he says. “It’s a wonderful picture. It has really allowed my net to go up while getting rid of a ton of stress, and it’s allowing me to focus on my love. I spend all weekend working in my own garden rather than being stressed about the schedule and what to do with guys on a raid day.”
Expanding the footprint
Now Hillenmeyer is in his element, running a landscape design firm that creates distinct, remarkable spaces, such as the Eastern Kentucky Hillside Gardens and farm-sized estates throughout the Lexington region. In 2013, he received the prestigious David E. Laird Award, presented by the Southern Nurserymen’s Association to the year’s top horticulturist under 40 in the South.
“I was very humbled,” he says of the recognition. “It’s an association my family has been involved in since its inception, and many of the plantsmen I look up to have won this award. In my mind, I have big shoes to fill to live up to what the guys who have won this award before have accomplished, and many of them have established themselves as the top horticulturists in the world.”
Meanwhile, Hillenmeyer has his eyes on geographic expansion and the local horse industry is allowing that to happen. Lexington, traditionally a thoroughbred community, is now entertaining sports horsemen. That includes people with farms in the area and beyond — in Florida, Maryland and other states. “They are on a traveling show circuit with multiple properties,” Hillenmeyer explains. This is one of his client bases.
While at parties and being entertained around town, out-of-towners learn bout his work. Hillenmeyer is expanding by word of mouth, and he can pick and choose the projects he takes these days, now that he doesn’t have the worry of keeping crews busy.
Hillenmeyer’s sweet spot in design is where plant material and structural design meet. As a plantsman, he works from a palette of 300 to 400 varieties — not a basic 10. “A lot of times, there is a huge gap in being a really knowledgeable plantsman and being a really good designer, and I’m constantly trying to look at how I take carefully structured design and show off some interesting plant material without it looking like one of this and one of that,” he says. “I’ve gotten to be known for that.”
And many of his clients who recognize this about Hillenmeyer turn him loose on projects. That’s when he has to pinch himself. The decision to focus on the passion and not get tied up in operations has been a rewarding one. “I’m really excited to keep pushing the boundaries of what my clients will allow me to do,” he says, enthusiastically adding that this freedom makes the job “1,000 times more exciting.”
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