Yellowstone Landscape Group acquires three companies to form a strong hold on the industry
In about a year’s time, Yellowstone Landscape Group of Dallas, Texas, went from total obscurity in the landscaping industry to climbing into the top 20 largest landscape companies based on revenues.
Gridiron Capital, LLC of New Canaan, Conn., is the private equity firm behind the formation of Yellowstone, previously known for manufacturing youth athletic equipment, aftermarket products and specialized industrial parts. So, why did they delve into the uncharted waters of the highly fragmented $50 billion landscape services industry?
For starters, Gridiron knew they could place their trust in a well-seasoned entrepreneur with a unique vision for the landscaping industry who could use his vast knowledge in business administration and business mergers. What’s more, this new CEO was to come full circle from when he was a kid in high school operating his own successful lawn care company.
“Yellowstone Landscape Group, the holding company, doesn’t profess to be an expert in the landscaping industry,” explains John Miller, the entrepreneurial CEO and green industry visionary for Gridiron. “Our three operating companies are the experts. What we offer is support in such areas as insurance, IT systems, financing and acquisitions. The operating companies share their expertise in their respective specialty areas with each other. Altogether, we prefer to look at it as shared business intelligence.”
This trio began as a duo first with BIO Landscape & Maintenance in Houston, Texas, and Piedmont Landscape Contractors in Atlanta, Ga., acquired in April 2008, immediately placing Yellowstone in the top 20. Then, Austin Outdoor in Bunnell, Fla., acquired eight months later, gained them an even firmer foothold in the top 20.
Today, Yellowstone is meeting projections with expectations of nine-figure revenues in the coming year. For now, it will be staying true to its key geographic markets in the Sunbelt states in, or near, their respective member’s headquarters of Florida, Georgia and Texas. Unique to the industry, its goal is to maintain a 60/40 mix of maintenance versus construction sales.
Yellowstone, unlike past landscaping industry merger and acquisition models, didn’t want to force its acquired companies into any common template. It recognized that their markets and customer bases were different, and each company’s management was proven.
A trio of acquisitions
Robert Taylor, founder of BIO, chose Yellowstone after prepping a couple of really good books for presentation purposes with several interested buyers. BIO began as a liquid fertilizer company in 1982. Since then, it has expanded and is recognized as a premiere landscape services company in the greater Houston area.
“Yellowstone fit my exit strategy perfectly,” Taylor explains. “I didn’t have a son or daughter to pass on the baton. I wanted my top managers to be protected and even benefit from any sale.”
As the most senior of the three partners, yet only in his early 50s, Taylor wasn’t ready to quit the business he loved running. Yellowstone had no problem with that. Beyond bringing in the important geographic market of east Texas, BIO’s expertise on large government contracts was attractive.
Now a partial owner of Yellowstone, Taylor and BIO’s leadership team retain significant ownership in BIO and will also be leading Yellowstone’s expansion throughout Texas. He now has some liquidity and has spread out his risk. The other two partners at Piedmont and Austin also have an equity stake. Yellowstone believes it’s crucial for its acquired companies to have skin in the game.
Although Piedmont is a young company, merely a decade old, it was approached by Yellowstone for not only being one of the largest locally owned landscaping companies in Georgia, but also for being skilled at obtaining maintenance contracts with major HOAs.
“Many of our people were leery about going into this arrangement because of all the negative things they’ve heard about similar acquisitions in this industry in the past,” says Drew Watkins, Piedmont’s co-founder. That was quickly dissipated when Yellowstone allowed the company to continue to run like it always had with Watkins still making the day-to-day decisions on an operational basis.
“Yellowstone is not interested in micromanaging us,” explains Taylor. “They didn’t come in and change things indiscriminately. Rather, they focus on big picture items by telling us ‘This is where we want to be and what are your ideas for getting us there?’”
Working through an investment advisor to find a private equity firm to partner with and grow its business to the next level, Austin looked seriously at about half a dozen other private equity firms. None of them provided the same level of opportunity that Gridiron offered through Yellowstone. Its lucrative Florida market and experience with the installation and management of Class A communities and resorts extending to the Bahamas attracted Yellowstone.
“We now have the financial strength to focus on what we do best,” says founder Edward Schatz Jr. “That is taking care of our clients, as well as our employees who serve them.”
Taylor admits that his job has changed since the merger. He is now spending much of his time communicating with corporate, acquiring other companies and preparing long-term budgets. There is now a huge shift within his organization on sales and contract retention. “The refocus of attention and reporting up has changed my workday, but I understand how necessary it is to achieve long-term goals,” he says.
From an operational standpoint, Yellowstone brought Piedmont to a whole new level with fresh ideas operationally. “Prior to Yellowstone, we were in the Dark Ages with our IT systems,” says Watkins. “Now we are using state-of-the-art financial software and are going through the process mapping exercise companywide. As we grow, there will be HR improvements in healthcare benefits and talent sharing.”
Since Austin’s acquisition, Schatz has had to take on additional reporting requirements, but doesn’t find it overburdening. “Now my focus has expanded to handling all of Florida for Yellowstone, not just the markets we were currently serving [Florida’s Atlantic north coast].”
The three operating companies share their ideas on sales markets. Each company shares bid strategies with the other operating companies to allow expansion into all types of work. The principals speak over the phone regularly, there are weekly conference calls with each company’s sales managers and key decisions are made at quarterly roundtable meetings with the four partners.
“I have learned a tremendous amount from the other principals in areas where Austin hasn’t been traditionally strong,” says Schatz. “For example, Robert Taylor taught me about bidding on government contracts; Drew Watkins, apartment maintenance; John Miller, long-range planning and keeping an eye on the big picture.”
Watkins adds, “When you operate on your own, you are on an island. You don’t have the benefit of picking the brains of other companies. Now I have access to free-flow of valuable information whenever I want it. I can pick up the phone anytime, ask tough questions and get other valuable opinions.”
Gathering consensus on how to bring in the branding of Yellowstone’s well-established companies in their respective markets presents an interesting challenge. “Everyone has a different idea about icons, logos and colors,” says Taylor. “The result of those discussions is a totally different look for our trucks, uniforms and marketing material.”
Miller is OK with the Yellowstone label added somewhere near each company name like a “Good Housekeeping” seal. “We want to position our companies in our clients’ minds that each one is part of a broader entity enhancing its financial capability to deliver, but focused on local needs and relationships.”
For the past 20 years, Tom Crain has been a regular contributor to B2B publications including many in the green industry. He is also a marketing communications specialist for several companies in the travel, agriculture and nutrition industries.