When the Hunter Becomes the Hunted
October 9, 2020 |
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Tom Farinacci II built Houston Green Leaf up to 35 employees when he solid it to Grounds Control, a national landscaping company, for around four times EBITDA.
Along the way, Farinacci grew by making two critical acquisitions, so he has been on both sides of a deal and brings both perspectives to this interview. Some macro themes should pop for an inspiring value builder, including:
Pick a quiet corner: There’s nothing glamorous about cutting lawns, but in part, that is the magic of what Farinacci built. He started pushing a lawnmower at 15, and by age 45, he had built a company that was attractive to a national acquirer. Operating in the least glamorous corners of the economy are often where the most money is made. In Farinacci’s case, he was earning EBITDA margins of around 15% a year.
Location matters: Both when Farinacci made acquisitions and when Green Leaf itself was acquired; the location was important. Farinacci bought businesses dominant in specific neighborhoods, and Green Leaf was acquired in part because they had a substantial chunk of the Houston market — a large and growing megacity.
Humility: From a relatively young age, Farinacci had a number he wanted to sell his business for. Farinacci knew that if he could accumulate that much money, he could invest it and do what he loves, which is spending time with his kids and coaching his son’s football team. Farinacci avoided the trap of moving the yards sticks so many of us fall into when, instead of celebrating the achievement of a goal, we pick an even higher goal. Farinacci hit his number and had the discipline to sell.
There’s plenty more to take away from Farinacci’s interview, including:
- How to structure an acquisition
- How vendor financing can be used to acquire a business
- What to look for when vetting a potential acquirer
- How to pick an M&A advisor
Around 90% of Farinacci’s revenue was recurring thanks to long terms service contracts. Service contracts are one of nine subscription models you can use to transform your business from the transaction business model to an annuity business. We’ll help you discover your recurring revenue stream using The Automatic Customer Builder, the tool that underpins module 5 of The Value Builder System™. Complete module 1 right now by getting your Value Builder Score.
Check out our article on The Acquisition Entrepreneur.
About Our Guest
Tom was born in 1975 in Cleveland Ohio, moved with his family in 1978 to Houston, Texas in a southeast suburb of Clear Lake City. He attended Sam Houston State University in Huntsville Texas from 1993-1997 and received a bachelor’s degree in the Landscape Architecture field.
In 1998 he started his second landscaping business Pro Design Landscape and quickly grew in the residential landscaping market. In 2001 he acquired his father’s landscape business that he sold to him in 1998 and then joined forces to build the company to a higher level. In 2012 Tom decided to do a major acquisition to have a significantly large market share in the area and acquired Greenleaf Enterprises Inc. In 2017 still growing and did another acquisition of Riverstone Landscape and growing to 10 crews with 35 full-time employees.
After 30 years of working in the landscaping field and working towards and meeting all of the goals, Tom sold Greenleaf Enterprises Inc in 2020. He is currently investing in commercial real estate and willing to work in the consulting field for any service businesses to help them troubleshoot any problems prepare for peak efficiency to get any business ready for maximum production or ready for a timely exit from the field.
www.linkedin.com/in/tom-farinacci
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