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The lawn care industry is riding a wave of consolidation and sales as owners approach retirement age and, in many cases, navigate the next generation’s lack of interest in taking over the family firm. Other owners may be aiming to take advantage of the current opportunity to sell at a favorable price. As many landscape owners are sole proprietors, it’s critical to plan ahead for who will take the reins in the future, as well as identify how to replace the income they rely on, post-sale.

If you are considering a sale, preparation is key to a successful outcome for you and your family. In fact, according to a 2023 UBS Survey, 81 percent of business owners wish they had spent more time preparing for the sale of their business (Click here for Business Owner Resources).

Common mistakes to avoid when approaching a potential sale can include:

Unclear valuation: Ensure you have an independent valuation of your business before beginning the sales process so you are not surprised by the market reality of your company’s value; take the time to gain a sense of where similar transactions have fallen financially.
Inadequate income: Have a solid understanding of how you will replace your income after the sale is completed, including how much capital you will need to generate acceptable income in the future and how much you need financially to maintain your lifestyle.
Unplanned expenses: Be sure to calculate in advance and plan for any expenses that were once covered by the business and which will now come out of household spending.

To help clients avoid mistakes like these and strategically approach the sales process, Gerry McGinley, a Managing Director and Financial Advisor at UBS Wealth Management Americas with over 30 years of industry experience, recommends involving a financial advisor early on. “Our team can add the most value prior to a sale, both by helping an owner understand what can be done to help improve the value of the business before it is offered for sale and outlining solutions to maximize the payout to the owner,” McGinley says. “Value could mean more money, better terms or maintaining some sort of control for you or a family member.”

McGinley also advises owners exploring a sale of their business to focus on the following:

Know the marketplace: Arrange for an independent valuation of your business and gain a sense of where similar transactions have been priced.
Build a team: Assemble a team of advisors who collaborate well and can help manage and complete the sales process effectively.
Create a succession plan: Research potential buyers and understand the options available to you, your family and employees. In addition, consider a variety of exit strategies, such as transferring the business to family or employees, selling the company privately or publicly, or liquidating the business.
Develop a comprehensive financial plan: Conduct in-depth financial planning before the sale to help reduce taxable impact, which can maximize net proceeds and drive more money to the people and causes you care about. A well-considered financial plan also can identify a potential wealth gap between the amount you receive from the sale and the income you and your family need. Make sure to include estate and legacy planning strategies as part of these conversations.

Finally, be sure to consider your next chapter after the sale of your business. There is an emotional side of the exit, which merits as much planning as the financial side. Consider how you will spend your time and energy going forward, both socially and professionally. It is important to look ahead to what might take the place of your business once the sale has been completed, whether a new venture, not-for-profit work, investing or supporting your children’s businesses.

According to the 2023 National State of Owner Readiness Report published by the Exit Planning Institute, “Historically, personal planning has been the most neglected aspect of exit planning and tends to be very emotional in nature…There has been a significant shift in who owners see as their most valued advisor.” As per the report, Financial Advisors have moved from fifth to first in who owners value most. CPAs (previously first) have moved to third.

A successful exit starts with a winning team and a solid plan. To gain insight into financial planning, valuation and your next chapter, please contact Gerry McGinley at 212-821-7027 or via email at Gerry.McGinley@ubs.com.

* UBS Investor Watch “Winds In Your Sail” July 2023. About the survey: UBS surveyed 416 US business owners who are looking to sell their business in the next five years and 123 who have recently sold a business. Each business owner has at least one employee and $1M in annual revenue. Survey was conducted from April 12th – 20th, 2023.

Gerry McGinley is a Financial Advisor with UBS Financial Services Inc. a subsidiary of UBS Group AG. Member FINRA/SIPC in 299 Park Avenue 26th Floor, New York, NY 10171.  The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.  Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc Neither UBS Financial Services Inc. nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement.

As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that you understand the ways in which we conduct business, and that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. For more information, please review client relationship summary provided at ubs.com/relationshipsummary, or ask your UBS Financial Advisor for a copy. Expiration: 5/31/2025

Review Code: IS2402629