A way out

For many United Kingdom mom-and-pop nursery operations, exiting their business smoothly and with no financial loss is a real challenge. Perhaps the principal reasons for this are the lifestyle business trap and a lack of succession planning. Many family nurseries in the U.K. have been founded by passionate horticulturists, not necessarily businesspeople. The business is their life’s work and passion, and thoughts of exiting are often postponed until it’s too late. The problem here is that the owner’s expertise, reputation and personal relationships are the business. Without them, the commercial value plummets and their children often have no interest in taking on the physically demanding, financially precarious work. For many there is also the mentality of passing on the business, with nursery owners not thinking in terms of a financial exit strategy. Their goal is custodianship. And their motivation is to preserve the collection and the legacy, not to maximize shareholder value. This leads to a preference for passing it on to family or to a like-minded individual, often at a below-market price or through a slow, unstructured handover, rather than a clean, formal sale.

U.K. nurseries have been difficult to sell, largely because the main assets, land, specialised infrastructure and plant stock are often illiquid and tied to a specific location and purpose. Plant stock is a perishable inventory that requires constant care. This makes the business unattractive to many investors who seek quick returns or easily liquidated assets. Furthermore, nursery owners struggle to exit the industry through a trade sale as the business model is inherently risky and subject to forces entirely beyond its control. The weather determines the entire trading cycle, so a late frost, hot dry spring or a wet summer can destroy stock or kill a key selling season. Furthermore, events like the 2008 financial crisis or the COVID-19 pandemic create wild, unpredictable swings.

Despite the many challenges U.K. nursery owners may have in exiting their business, exiting is not out of the question. Several strategies are available to would-be retirees. A management buyout can work for owners who want to preserve their legacy and reward loyal staff. In simple terms, the existing management team or employees pool resources to buy the business from the founder. Another increasingly popular model is an employee ownership trust (EOT), a way for a company to become owned by its employees indirectly, with a trust holding a controlling interest in the company for the benefit of all its eligible employees. Grower and retailer Cooling’s Nursery became an EOT in 2019, transferring a 75% controlling interest to the EOT, while the Cooling family retained a 25% stake. This change was initiated after the loss of a key family member to secure the future of the business and to involve the team, maintaining the family-like ethos. Another classic exit strategy increasing in popularity is acquisition by a larger horticultural organization. A larger company buys a smaller one to acquire its assets, customer base, brand or expertise. The U.K.’s largest garden centre chain by turnover, Blue Diamond, has acquired several wholesale nurseries in recent years, enabling them to vertically integrate their business, have greater control over the supply chain for garden plants and increase margins. Likewise, the 13 strong family-run chain, Squires, has recently purchased Barnsfold Nursery, a seasonal plant nursery, and also the well-respected nursery stock producer Liss Forest Nursery, founded by the late Peter Catt — a nurseryman noted for his extensive plant breeding.

So, while exiting a nursery business in the U.K. is difficult, it is not impossible. Those who do manage an exit often plan it for years in advance. Likewise, an exit is easier if the owners have diversified, as this builds value — a business with multiple revenue streams is always more sellable. The cleanest financial exit is often an acquisition by a larger group, but this is only viable for nurseries of a certain scale and profitability. For many though, a managed wind-down of their nursery is the realistic, if bittersweet, conclusion to a lifelong project and passion for plants.