This series features companies that are growing through M&As.
When most landscape companies sell to a private equity firm, they understand the business will be grown and sold to another private equity firm later down the road. This isn’t the case for owners who sell to Chenmark, which sometimes gets labeled as a permanent equity firm.
“I think that is a very appropriate label as we intend to own the companies we acquire – typically from retiring owners – indefinitely,” says Palmer Higgins, a partner at Chenmark. “Private equity companies raise funds from investors with a mandate to sell the companies they acquire and return capital to those investors, normally in a 3-7 year timeline. Chenmark, on the other hand, is entirely self-financed, meaning we don’t have any mandate to sell any of the companies we acquire and can, therefore, focus on truly long-term business building – the same business building the previous owner likely did for the past ten, twenty, or thirty years.”
Higgins notes that while some buy companies as an avenue of growth, Chenmark is buying a company that will be a standalone entity. He says when you try to merge two companies there will be friction between how the businesses previously operated and how they will operate moving forward.
“Fit – cultural and operational – becomes super important here as it will be the critical factor for success post-closing, but also the hardest thing to quantify in an Excel spreadsheet!” Higgins says.
Chenmark isn’t solely focused on businesses in the landscape industry. They have companies in the agricultural, tourism, and manufacturing industries from Maine to Florida to British Columbia, Canada. In 2015, Chenmark acquired their first landscape company, Seabreeze Property Services, based in Portland, Maine.
In 2017, they acquired Mainely Grass, based in Bedford, New Hampshire; Piscataqua Landscape and Tree Service, based in Eliot, Maine; and Maffei Landscape Contractors, based in Mashpee, Massachusetts, which was rebranded to Outerland in 2021.
Higgins says that while they have a concentration in the Northeast, they continue to look at lawn and landscape companies throughout North America. He says they focus on acquiring small and medium-sized businesses that have at least $1 million in annual cash profit.
“A number of the companies we already own have gone on to acquire smaller companies themselves, especially in the green industry,” Higgins says. “In this case, the size threshold is not nearly as important, and the fit of the two entities becomes the focus.”
Chenmark likes to pursue dependable companies they know can stand the test of time.
“We are buying long-established, successful businesses, which by definition means they have been doing a lot right for a long time, so we are not looking to change that,” Higgins says. “That said, no company can stay stagnant and continue to succeed, so we focus on making sure the business is set up for success not just this year and next year, but five, ten, and twenty years down the road.”
Higgins says they typically buy businesses from owners who are ready to enjoy retirement.
“That is the primary reason we have developed our CEO training program,” Higgins says. “In order to successfully acquire and run the company post-closing, we need to be confident we have the right person for the role ready to step in and fill the void of the outgoing owner post-transition period.”
The firm aims to be decentralized, leaving autonomy and responsibility to the CEO and his/her management team. Chenmark has experts in finance, HR, technology and marketing to support their companies when needed.
Companies under the Chenmark umbrella also are able to connect formally and informally. All the CEOs of Chenmark companies meet in person quarterly and different group functions like sales and HR have recurring meetings and check-ins to discuss role-specific topics.
“We’ve been very pleased with the frequency that members of our various companies call one another to ask a question or talk through a problem they are dealing with,” Higgins says. “We’ve found that when we get our teams talking, they often find that they’re facing similar problems regardless of the industry they are in.”
Higgins says the only person who typically leaves an acquired company is the outgoing owner after a transition team.
“People want to work at a place that treats them well and gives them opportunities to progress in their careers, and customers want to work with companies that are easy to work with and provide value above what they charge.” Higgins says. “It is simple, but not easy, so whether we are working with customers or employees, we focus on doing that stuff uncommonly well.”
Higgins admits that it’s easy to say business is all about people but it’s another thing to truly understand how important it is to get the people element right.
“If you don’t get the people right, you will never succeed,” Higgins says. “It’s a lesson we’ve learned firsthand over the last 10 years and one that we will likely continue to be reminded of over the next 10 years.”
Another notable aspect of Chenmark is rather than creating one cohesive brand for their four landscape companies; they opted to keep each business’s unique branding.
“We think the best decisions get made by those closest to the action so we want to empower our companies to be in the driver’s seat for their companies and own the outcomes of their decisions,” Higgins says. “Also, these companies have been around for decades and have built up a large amount of brand awareness and goodwill that we want to build upon.”
Each company has their own individual company culture, mission, vision and values. Higgins says he wants each business to have their own identity curated by their leadership team.
“Chenmark does have its own values but they are not forced on the companies we acquire,” Higgins says. “Rather, we believe there is ample room to operate as a part of Chenmark while maintaining individuality at the same time.”
Higgins doesn’t expect they’ll change their approach to business ownership.
“Plus, if we do our jobs well in acquiring great companies and supporting them with great talent, why would we want to sell?” he says.
This article was published in the Sept/Oct issue of the magazine. To read more stories from The Edge magazine, click here to subscribe to the digital edition.
