Selling a Business: Experience #3
My intent with this website is not to convince anyone to start a business, sell a business, or NOT start or sell a business. I am simply sharing my experiences and insight to hopefully assist anyone in the process. I completely understand and respect the effort it takes to start or operate a tree care business of any size. Obviously, other former tree care business owners could have had similar or completely different experiences. These just happen to be mine.
The Scenario
National tree care company purchasing a local tree care company.
Companies were different in size and did similar (and different) services.
I was the founder/ part-owner of the company being purchased.
I was hired as a Commercial Sales Arborist during a 2-year buy-out period.
Timeframe = 2020-2022
The Buy-out Measurables
My perspective of this buyout will be from the vantage point of the buyout and following 2 years. I need to point out that the first and second years were at different office locations with different local managers. Some of the experiences were similar, but some were different. I will measure each of the following 10 parameters with one of these rankings (+), (++), (-), (--) or (E) for even:
Employee Retention (-)
By the end of the first 3 months, 4 employees (all production crew / PHC applicators) were gone, three of them citing issues with management and safety concerns relating to crew talent. Later during the first year, 2 additional employees (1 climber, 1 owner) moved on. It was becoming obvious before the end of the first year, this buyout was a most likely a mistake. Even though the first year was nothing short of a disaster, employee retention did actually stabilize for the second year.
Employee Engagement (-)
The blending of teams was attempted with some success, but it did not result in great engagement. While there was actually effort to gauge and make improvement, progress was stunted. One specific local manager did put in quite a bit of effort, but the lack of talented crews made it very difficult to improve morale and engagement. There also seemed to be an obvious rift between local management with many important topics.
Client Retention (- -)
Within the first month following the buy-out, I was informed by local management, there just wasn't enough crews to handle production needs. A few months earlier, the notion of selling my business so I could benefit from THEIR resources, equipment and talented crews was a huge selling point. I don’t want to say this was an outright lie by the purchasing company, but it was definitely misleading at best.
Professionalism (+)
While both companies were TCIA Accredited companies, professionalism improved somewhat. However, looking at crew talent / quality of work (see below), I think the level of professionalism was somewhat perception and not reality.
Safety / Injuries / Damages (-)
Even with more emphasis on safety, the incidences regarding damages and injuries seemed to be a constant issue. The lack of crew talent proved too much when it came to safety concerns. Talking about safety cannot overcome lack of talent.
Customer Service (- -)
I felt the customer service may have been the biggest hit after joining the new company. Between sales, being forced to work with crews and attempting to train a constant stream of new employees, customer service took a massive hit.
Crew Talent (- -)
Both companies had talented employees, but the need for more crews diluted the talent so thin it became a safety concern. For most crews, employees were forced to perform one level above where their talent was. This resulted in an unacceptable level of poor service, damages and injuries. For year 2, this improved but a great deal of damage was done to the client base.
Quality of Work (-)
While I was able to utilize a handful of my old reliable employees, I was given an influx of new employees with no experience. Between spring and fall of the first year, I had used 20 different employees most of them with zero or minimal experience. This resulted in constant communication efforts, poor quality pruning, poor quality tree planting and many other issues. The lack of talent put intense pressure on the few talented employees I did have to help out. For much of the summer, I had to reduce my sales time to help out with production. This caused customer service issues and resulted in working many extra hours.
Internal Processes (E)
I felt that both companies had a solid internal structure and processes to handling hiring, training, development, scheduling and general operations. The merger took some pressure off, but I wouldn’t say it necessarily improved.
Ease of Working with Purchasing Company (-)
While I would note that one local manager truly did try to put in effort to ease the transition period, that’s about where it ended. One of the obvious concerns was the disconnection between local and national management. A pressure developed between what was written in my legal buyout contract and the expectations of local management. Several of the decisions made by local management breached my contract and put my buyout potential in jeopardy.
Overall Summary of Experience
It took 4 years to prepare myself mentally to sell my company, but in the end, it was time. I did entertain multiple offers from different companies. However, the offer I took seemed to be the best opportunity. I was “sold” on the opportunity to slide into commercial sales while developing a new landscape division providing high-end shrub care and planting. Within the first month, I was informed there was not enough production crews to handle all of the shrub and planting backlog. Almost immediately, I had to fire clients and reduce the amount of work I had sold. Within 4 months I had lost many more clients due to an inability to provide service. By the end of the first year, I lost almost half of my client base it took 20 years to build. I can’t imagine this beginning being any further from what was imagined. Some items improved the second year, but other items worsened.
Last comment from The BIG Oak = To this day, I’m not sure if I was lied to or misled by management. For 2 years, I did everything humanly possible to keep things afloat, but in the end the partnership was crumbling apart. As the only employee with a buyout contingency, there is a tough balance between doing what is needed to protect my clients (and buyout) and doing what is needed for the company. The company needed me to take over half of a client base from another Sales Arborist who was leaving. I was already overwhelmed and had no capacity to handle this while I was trying to repair my damaged client base. This decision essentially led down the path to ending the relationship.
The 2 hardest things to swallow about this attempted merger was the lack of help from local leadership to help protect my buyout and the lack of effort to establish a shrub care and planting division. At no point during the 2 years was there even an attempt to have an initial discussion. This was the main deciding factor to selling my company and I was not even awarded an hour to discuss the potential. Over a 27-year career in tree care, this was the most disrespect I have felt.