Central Valley Fund (CVF) invested $7.2 million in growth capital financing in two large landscape contractors, Signature Landscapes, based in Reno, Nev., and Coast Landscape Management, based in Napa, Calif.
The transaction includes equity investments in both companies, which will be merged into a single entity during the fourth quarter. Signature ranks No. 122 with $14.7 million and Coast ranks No. 128 with $13.8 million on the 2017 LM150 list of largest landscape companies. Combined, they’ll be close to breaking into the top 50.
The investment was completed in partnership with Lebo Newman, CEO of Signature and shareholder in both companies, and Kelly Solomon, CEO and shareholder of Coast.
Newman said the primary reason for pursuing the deal was simplification. The “sister companies” have long shared training and other resources. The companies have discussed merging many times.
“We wanted the companies to be one in the same,” Newman said, noting different corporate structures required in California and Nevada made it difficult to determine shareholder values. “Having the equity investor allowed us to set a market value to set share values for the different shareholders we already had.”
Newman will become chairman and Solomon will be CEO of the combined companies. Justin Trimble will be COO. Minority shareholders including Tim Laskowski, Tim Scott and Sal Perez will continue in their management roles at the combined company.
The companies won’t unify under one brand now, Newman said. They will function as two separate operating units and retain their names.
“It’s an expensive thing to change logos on trucks and so forth,” he said. “If we do further acquisitions that might be in the cards.”
“We are excited to partner with Lebo and Kelly and their teams during their next phase of growth,” said Brad Triebsch, a managing partner with CVF. “Both Coast and Signature offer their clients turn-key solutions that continue to win accolades for quality, consistency and personal touch. Through a well-trained, loyal team and the latest industry technology, the companies provide a service level that cannot be matched by smaller providers. In addition to local market growth, both companies will play a significant role in consolidating this industry through accretive acquisitions.”
Acquisitions are likely, Newman, said, pointing to company culture, location (California’s East Bay and South Bay areas, in particular) and mix as key factors.
“Sure, we’d like some more commercial maintenance, but we’re open to companies that are more varied in their profit centers,” he said. “We know how to do a variety of profit centers and we know how to make money at all of them.”
