Lee Edwards: Growing The Greenery, Inc.

Craig Castelli (00:05):

Welcome to The Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli. Today my guest is Lee Edwards, President and CEO of The Greenery, a very successful commercial landscaping business. They’re based in beautiful Hilton Head. They have about a dozen or so branch offices all up and down the southeast. So Lee, let’s jump right in. You decided to join your parents in business in your early twenties. Did 25-year-old Lee have any idea [00:00:30] of what this business would become?

Lee Edwards (00:33):

Not really. You know, I knew from, I’d gone and worked at a different company. I did an internship at a large landscape company up in the Northeast, and I had worked at a couple other smaller companies. So I sort of had a vision of where I wanted the company to go more, like, in five or 10 years, but I really [00:01:00] didn’t quite see it spread out across the southeast. I thought we’d grow a good bit in coastal South Carolina and Georgia, but it’s really become a lot more than I think I envisioned.

Craig Castelli (01:14):

Yeah. What do you think has been most critical to your success up to this point?

Lee Edwards (01:20):

Well, I’ve always felt we need to be a growth oriented company. And the reason for that is because to me [00:01:30] in this industry, the way you hold on to really good people is you got to provide that next step for ’em for growth. Whether that’s a guy out there running a weed eater who wants to become a crew leader or become a tech or a manager, or if it’s somebody that you, some kid you hire out of college with a horticulture degree and he wants to become a branch manager or a regional manager or [00:02:00] a VP, but whatever that next step is for that person, if you don’t have that step up for them, that opportunity for them to step up and grow their career or grow their income, well, they’re going to go find somebody who will give them that opportunity or they’re going to go out and start their own company. Either way you’re going to be in competition with ’em.

Craig Castelli (02:28):

Yeah, I mean, that’s a great observation. Right. Yeah, and [00:02:30] if you’re not growing, there’s only so many of those roles available, so you need to grow in order to create those opportunities.

Lee Edwards (02:36):

Yeah. Well, the last thing you want is a really talented person feeling like they’re in a dead end job or that they don’t have any future at your company.

Craig Castelli (02:48):

It also reminds me of that old adage, the debate, what happens if we train our employees really well and they leave? And it’s like, well, what happens if we don’t train ’em and they stay?

Lee Edwards (03:00):

[00:03:00] Good point. Yeah.

Craig Castelli (03:03):

So you guys took, I think, really the ultimate step in terms of a commitment to your employees and showing ’em growth in the early 2000s when you launched an ESOP and eventually reached the point where you became a hundred percent employee owned. So just take us through that and why it was important for you to make that move.

Lee Edwards (03:26):

Well, there are a couple of things that played into that. [00:03:30] I had moved up to Charleston, South Carolina and open a separate company called The Greenery, LLC, and it was outside of The Greenery Inc. We still shared resources and same name branding and all that, but it was a separately owned company, and I was running that my father and I and a couple other people were partners in it. And then my dad started [00:04:00] thinking about his future and retirement at some point, and then he got cancer and that sort of really accelerated that. And he was always a big believer in that whole growth thing and promoting from within. And we had a bunch of really great employees that had been there for a long time and helped really grow the business. And so I was sort of thinking I [00:04:30] was going to keep on doing my thing in Charleston.

(04:33):

I always thought my dad was the type of person who would work till the day he dropped and he was diagnosed with a couple of different types of cancer at 59, and he started really rethinking things. He’d already even considering an ESOP and that just sort of accelerated it. So he and my mom started the ESOP and then [00:05:00] he sort of realized that if he was going to do that and get out of the business a hundred percent, he needed to go ahead and bring in somebody. And so he said, I’ve got a bunch of great people, but nobody who I think can take over the rein, so we’ve either got to go hire somebody or I’d really like you to come do it. And so I said, okay. And so I came back in early 2007 [00:05:30] and I took over the reins shortly thereafter. And the deal my dad and I had, we both sort of agreed to this was that he wouldn’t stay in the business. I didn’t want somebody looking over my shoulder. And to be honest, he didn’t either. He just said, Hey, I want to retire. I want to get out of the business. I want to stop working and I’m available as a consultant if you need me. And I’m happy to report he’s been cancer [00:06:00] free for well over 20 years now and he still does a little consulting for me when I need it.

Craig Castelli (06:08):

Well, that’s amazing to hear. And I’m just curious now going a little bit off topic, but when you first started, did you take him up on the consulting offer or did you know everything that there was to know at that point in life and just say, “Dad, I’m good.”

Lee Edwards (06:25):

I wish I could say I knew everything, but I try not to bother him too much. But [00:06:30] on occasion, he’s a good sounding board to have and he’s still proud of the company and he likes to see what we’re doing and see the growth we’ve achieved. And even some of the people that he hired over 20 years ago are still here, and he might have had a guy that some kid he hired right out of college and who’s now one of my vice presidents or regional manager or a branch manager. And so he likes to see what’s going on, [00:07:00] but he also likes not coming to work every day. And he and mom do a lot of traveling and they’ve got a great life outside of work, so it really has worked out well.

Craig Castelli (07:14):

As they should, but I’m sure he’s proud of you and proud to see where this business has become. And it’s a testament to both of you if you have hires that he made that have now become leaders in your organization. I mean, you both did things right along the way, which is not something that we can say always [00:07:30] happens with generational transfers of businesses.

Lee Edwards (07:33):

Well, a lot of those long-term employees are key individuals here, and that’s something that I really take a lot of pride in. I love our long-term clients and our long-term employees and that really, I think it’s a testament of hiring good people, providing that opportunity for them to stay here. [00:08:00] I mean, we need ’em their the backbone of the business. So I’m not the one out there meeting with clients every day or out there keeping our properties looking great. It’s all those other troops out there.

Craig Castelli (08:17):

Yeah, yeah, absolutely. So you guys recently reached another inflection point and you had to raise a little capital from an outside investor to facilitate the buy out of the ESOP and accelerate your growth. There’s only so much you can grow [00:08:30] with your own internal resources. How did you know it was the right time to do something like that?

Lee Edwards (08:35):

Well, there were a couple of factors at play. Number one, as great as the ESOP has been, we’ve been employee owned for about 20 years, and it’s been a really great retention tool when somebody earns stock in the company and you hand ’em that stock certificate and the first one they get, [00:09:00] it’s maybe a few hundred bucks or even a thousand bucks, and they’re like, big deal. But as that value’s gone up and then they earn more stock every year and after a few years somebody’s like, oh wow, this is real money. This is a difference maker.

(09:17):

And whether that’s a highly compensated person or the low man on the totem pole, it’s real money and it’s stock in the company. So the ESOP was really great in that and it helped [00:09:30] build that ownership mentality and it was wonderful. But as people earned stock over time it became more and more valuable. But as the company’s grown, there’s a finite amount of stock. And so what would happen as the company gets bigger, the stock amounts stays the same so that the amount of stock you’re doling out, it’s kind of a smaller piece of the pie, if you will, and [00:10:00] it’s not as valuable as it used to be. And it’s already hard to tell somebody that, Hey, your biggest benefit to come work at this company is that you’re going to earn stock in it and it’s going to be a great retirement program.

(10:15):

I mean, that’s a hard sell for a lot of people, especially young people when you say, oh, well you work here for 20 years and you’ll build up this great nest egg. And then now that that stock is getting split up more and more, [00:10:30] it’s not really as great a benefit as it used to be. And so you sort of start to have the haves and the have nots. So the haves are the people that have been here a long time that have a lot of stock and to have nots or the new people that you want to have tons of energy and be excited about joining the company, and they’re really not ever going to have that big payoff. So that’s when we determined it is time to start looking [00:11:00] at other alternatives. And it was also good timing wise, we’ve been having some good growth and we sort of got a really good team of people that we really wanted, we knew we wanted to keep and reward, so we said, this is probably the time to try and figure out how to buy out the ESOP.

Craig Castelli (11:29):

Yeah, [00:11:30] that’s interesting. Has it shaped your thinking about the future in any ways, perhaps differently than before you went through that?

Lee Edwards (11:38):

I don’t know if it’s shaped the way we look at the company differently, but it’s given us some added professionalism. And like you said, you mentioned earlier, we want to accelerate our growth. There [00:12:00] are all these great things about ESOP, but part of it is that you have to buy back stock every year as people retire, and it sort of retards your growth because of financial constraints. You have to do that stock repurchase every year. And so it allows us to maybe look at some more acquisitions and maybe accelerate our growth a little bit, which is something that I’m pretty excited about.

Craig Castelli (12:30):

[00:12:30] Yeah, well let’s spend some time talking about that. So just level set up until this point, how much of the expansion has been opening new branches and how much has been from M&A?

Lee Edwards (12:42):

Well, we’ve sort of organically grown each branch and sort of reached out just a little bit, maybe start doing work in a market and one that’s not too distant, and then [00:13:00] eventually build the capacity out there and the critical mass that we can say, okay, now we’re going to plant a flag there. We’re going to open a branch. And then we’ve also done that where we’ve gone into a market, we start doing work there, we look at business there and we find a small company to buy out. That’s what I call sort of a hybrid. It’s between a greenfield and you’re not buying a big team, you’re buying a small group [00:13:30] and maybe a facility. And it’s not like you’re just going to a new market and saying, Hey, we’re going to start here. So we’ve done a few of those over time. We did a fairly sizable acquisition in down in Jacksonville, Florida, and that was more of a traditional straight up acquisition. We bought their team, we sort of added to it, we’ve grown it since then we did another one up in Greenville, South Carolina. [00:14:00] So we’ve done a combination, but most of our growth over time has been just organic growth within our branches.

(14:14):

I don’t know if I got into it earlier, but the company in Charleston that I started years back, The Greenery of Charleston, we eventually sold it. They continued doing business there under The Greenery name, and we sort of had a little partnership together, [00:14:30] and that company has recently sold, but they were not allowed to sell the brand. And so now we’ve opened up a new branch back in Charleston. So that’s a place where we’re excited, it’s a good market. We’ve got name recognition and things have sort of exploded there. We’re really taking off. So that’s an example of just go on and open a new branch in a market where technically we’ve been in before, but it’s been a long time [00:15:00] and no acquisition there. But things have really taken off and done well. But we are looking at both though. We want to continue expanding the branches we’re in and we are actively seeking some acquisitions.

Craig Castelli (15:21):

Two things stand out to me about that. Number one, it sounds like as you’ve grown, you’ve been comfortable taking on bigger and bigger acquisitions and committing more resources to [00:15:30] this. And obviously with the refinancing of the business, it gives you that much more firepower, but two, and this is more important, M&A alone is not the way to grow. If you can show that not only can you buy another business, but you can grow it after you buy it and you can keep growing this business if you didn’t make another acquisition, that builds more value than anything else you can do in a company in my opinion.

Lee Edwards (15:53):

I think so. But it is nice, especially if there’s a market, [00:16:00] to me, an acquisition really makes the most sense. If there’s a market that you say, we want to be in that market, and it’s hard just to go move to a new state, a new city, and to have the people in place, it is hard to build a branch like that and it’s slow going in the beginning. So that’s where I think an acquisition makes sense. But you’re right, we want to continue growing [00:16:30] where we are, and if we make that acquisition, we absolutely have to grow it. So

Craig Castelli (16:36):

No question. So when you’re out there looking, what excites you the most when you look at someone else’s business?

Lee Edwards (16:43):

Well, it’s the people, number one. They’ve got to have a good team. We’re not interested in buying a bunch of contracts and a bunch of old crappy landscape equipment. We’ve got plenty of that. You got all you can handle, right? Yeah. So what we are looking [00:17:00] for is somebody who’s going to be the right fit for us. We’re typically not the low ball price, the mow, blow and go guy. We are looking for companies that have good team members that want to grow their career and be involved in a professional organization. We’re looking for companies who have long-term clients, not the just churn and burn [00:17:30] low bid guy. So that’s really important. Company culture is super important to us.

(17:39):

If there’s a business owner who’s maybe considering getting out at some point, but he wants to take care of his team, he’s got a bunch of loyal employees, I think we could be a really good fit. Even though we’re not an ESOP anymore, we’re not employee owned, [00:18:00] we did have about 20 of our current team members roll their equity into our new entity. And so we still have a lot of employee ownership. So all our leadership team has ownership. I’m just a big believer in you’ve got to spread the wealth, you’ve got to spread the equity to get the most out of people. And so if we’re looking for an acquisition [00:18:30] and maybe if the owner wants to get out, that’s fine. Maybe he has some key team members that want to become part of the team, maybe not. And then the other opportunity is if there’s somebody who has a successful company and they’re a really successful landscaper, but maybe they don’t want to deal with some of the headaches that come with running a large business like insurance and HR [00:19:00] and legal and all that stuff, if they’re a really good operator and they want to continue growing that business, we’d love to have them join us and maybe they get a piece of the bigger picture we can take some of those headaches off of and literally help them grow that business.

(19:22):

And that’s something that I’m really excited about getting, and I’m excited about both opportunities, [00:19:30] but I think there are a lot of good people out there, good operators that maybe just don’t want to deal with some of those headaches and getting beyond the small to medium size and taking that next step. And there are a lot of headaches with that, believe me. I know because lived through ’em. And [00:20:00] now that we’ve gotten a little scale and a little more history on our side, we can sort of alleviate some of those headaches for some good landscape operators.

Craig Castelli (20:13):

Talk about that a little bit more because that was definitely a topic I wanted to get into. You’re solving numerous problems for any business owner who you’re acquiring, right? And if we assume that the valuation is table stakes, we don’t need to talk about that. If we [00:20:30] look at those who want to stay with the business in one way, shape, or form, how are you helping them solve some of those problems related to growth and busting through whatever ceiling they may have run up against?

Lee Edwards (20:43):

Well, it’s a lot of the systems that we have in place, whether it’s accounting, whether it’s operational operating systems, whether it’s [00:21:00] insurance or fleet management, what we try to tell our branch managers is we want you to go out and be a really great landscaper. We don’t want you to have to deal with the landlord or fixing the roof of your branch or you deciding, well, how much am I going to pay for this truck? Or how much am I going to pay for this skid steer? How am I going to finance a new fleet of mowers this year? We’ve got people that [00:21:30] do all that. Same way. If you get a trip and fall on a job site or a workers’ comp claim, we’ve got HR and we’ve got safety people who handle that sort of stuff and manage those things. And that doesn’t mean that the operator there doesn’t have to be involved in any of that. We want their input.

(21:55):

We want them to be a part of that, but they don’t get [00:22:00] bogged down with all that. We want people who can go out and sell business and inspire their teams to give great service, great customer service and quality long-term landscape production. And so I think those are some of the ways. A big one is we use Aspire, which it’s an industry-wide operating software, and [00:22:30] some people love it and some people, it’s not really for them, but we think we’ve gotten, it’s is a really good way to run your business, to see visibility and the people who like it really embrace it and they can do so much more. It just makes you become a much more productive operator. And some smaller companies are using that and it’s great if they are, a lot [00:23:00] of ’em aren’t maybe using it to the full extent that maybe we are.

(23:05):

I think we can help with that. We can also alleviate some of the headaches that go with it, because if you’re a real small operator and you’re trying to do this heavy lift, adopting a software system, that’s not much fun. We did it a few years back and it was a heavy lift. And to be honest, we lost a few people who just said, this isn’t [00:23:30] for me, which was fine, but the people who embrace it, they love using it, and you just get so much more visibility into the business and we want entrepreneurial people. We want people running those branches that have all that visibility who can take on a lot, and we let ’em run it like their own little business without a lot of those headaches.

Craig Castelli (23:58):

Yeah. Well, I think that those are some [00:24:00] things that are not as often talked about when we’re glamorizing entrepreneurship, the amount of risk of financial loss or litigation or anything else that just falls back on the business owner solely the mental load that they’re carrying around, worrying about all of these things. You can’t always quantify that. You can’t always put a value on that. But having that peace of mind that that’s no longer solely on you if you sleep better at night, [00:24:30] if you can have a little more balance in your life and oh, at the same time you can grow your business faster because those problems are solved. I mean, that seems to me like a pretty big win-win.

Lee Edwards (24:40):

I think so. I think anybody who’s run a small business has had those burning the candle at both ends. You’re worried about making payroll, you’re worried about making truck payments, you’re worried about collections, you’re worried about getting your [00:25:00] guys safely to the job and doing a quality job. Man, it can be a lot. And I’ve been there going a whole year without a vacation and without time. Often when I was in my twenties, I was fine doing that. Now I’m slightly older and I need a little more work-life balance. And there [00:25:30] are some folks that I think might be looking for that you can still have a very good income and a big upside down the road. So we’re looking for those people who certainly we want people who still have that fire burning, who want to grow their business, who want to charge hard, who want to take that next step, but also maybe [00:26:00] they do want to have a little better work-life balance and maybe have somebody else help ’em out with some of those other headaches

Craig Castelli (26:09):

And perhaps a little liquidity along the way, which also you can go big periods without, as we all know. So Lee, as we get close to wrapping up here, tell us what makes you most excited about The Greenery’s next three to five years?

Lee Edwards (26:28):

Again, I think it’s the [00:26:30] people, the growth and seeing the opportunities ahead. And we’ve been addressing with our leadership team, and we sort of build out an org chart and we say, okay, here’s where we are now and here’s where we’re looking in the future. And we have all these empty spots on that org chart and we’re telling people, Hey, these spots are going to need to get filled. And it can be y’all, it [00:27:00] can be new hires, it can be somebody from an acquisition, but there are going to be tons of opportunities for a lot of growth here for a lot of people. And I’m excited about seeing some people grow into those. Some people stay where they are and grow in the position they’re in. But I get excited when I see my team members getting all fired up about building the business, whether it’s building it in their department or whether it’s going and [00:27:30] moving to a new market and opening up a new branch. And we’ve done that several times and it’s pretty cool seeing somebody build a branch, build a region, or maybe move down the hall into a totally different role than they’ve ever been in and blossoming under that. We’ve got people who graduated with a horticulture degree or a landscape architecture degree or a economics [00:28:00] degree, and they’re doing something completely unrelated to what they started in, but they’re really successful and doing well all within our company. And that’s exciting. I love seeing that.

Craig Castelli (28:14):

It’s an amazing feeling. There’s really nothing quite like it. So last question here. Give us a piece of advice for a business owner, something that they might not have heard before.

Lee Edwards (28:26):

Well, I’ll relate it to our [00:28:30] industry, but I think this is true. And in a lot of businesses what I’ve found, and I’ve talked to people in our industry and our biggest expense in landscaping, you look at any landscaper’s P&L statement, and it’s always labor. That’s the number one expense. And that’s true with every single landscaper out there. But a lot of people, they look at that as a huge cost. I try to flip [00:29:00] that around and I look at our people as our biggest asset because like I said earlier, I’m not out there dealing with clients. I’m not out there doing the work, driving the trucks, running the equipment. We’ve got great people that are all doing that. And some of those great people are the ones building that relationship with the clients and that it doesn’t necessarily have to be the account manager.

(29:30):

[00:29:30] That can be the guy running a blower or a weed eater out on a job site and they’re working at a POA or a hotel or something and a guest or a homeowner’s walking by and you stop your blower and you smile and you wave at ’em and you say, good morning. We are part of that experience. And if you treat your people like they’re just a big cost, they’re not going to learn that. They’re not [00:30:00] going to realize that, hey, the client that’s there is the one that’s responsible for my paycheck. I tell them, Hey, treat your clients like they’re the ones paying you, because they are. And so if you treat your employees really well and you let them know that they’re part of the success and they’re the reason why you’re there, treat them your biggest asset and they’ll perform like that. If you treat ’em like [00:30:30] they’re just a really expensive cost, then that’s what they’re going to be.

(30:34):

And I’ve seen some companies like that, but I think especially in the service industry, it’s not like we have some new gadget or some great product that we sell, oh, this is so much better than anybody else’s electronic device or got a water bottle here. This is the greatest water bottle ever. Or it’s not like the latest Yeti that everybody [00:31:00] wants. We’re selling service and outcomes, and you got to have really good people to do that. So I think in most businesses, but particularly in a service oriented business like ours, you got to really build your team and treat your people like they’re more than just a cost. But I tell ’em all the time, you’re the biggest asset we have at The Greenery [00:31:30] is good people doing good work.

Craig Castelli (31:32):

Yeah, there’s no greater extension of your brand than your people. They’re the ones out there on the job sites, meeting with the customers, meeting with the prospects, demonstrating to the world what your values are, what your vision are, who you are as a brand. And clearly you’ve exemplified it because you have a lot of employees who in traditional businesses don’t stick around for very long, who’ve been with you for a very long time. It’s a testament from that belief [00:32:00] from the top being instilled through the entire organization.

Lee Edwards (32:04):

Well, like I said, we’ve got a lot of people that have been here a long time, and that’s what I’m more proud of than anything in this business. It’s exciting to see a new branch open or you do really well have a great year financially. But what makes me more excited is seeing those people stay here and continue building our business.

Craig Castelli (32:30):

[00:32:30] So Lee, if someone wants to learn more about The Greenery, let’s say they’re that next great hire with high potential or that next acquisition target, who thinks The Greenery would be a great next home for their business? Where can they learn more and how should they get in touch?

Lee Edwards (32:45):

Well, you can find us on the web. We’ve got a great website, TheGreeneryInc.com. You can read about us there, call us, reach out to us, contact us. Reach out to me personally or [00:33:00] our HR department. If you’re somebody who’s looking to build their career, I’m the main contact for potential acquisitions. And it’s not like I’ve ever called somebody and said, Hey, we’re interested in maybe buying your company. And they say, okay, great. We’ll sell it. How much are you willing to pay? It is never about that. It’s more talking, getting to know the people, figuring out, [00:33:30] Hey, do our values line up?

(33:34):

If somebody’s sole goal is to extract as much cash out of the business as possible, they’re probably better buyers out there or different buyers than us. But we know we’ve got to be competitive when we make an acquisition. But it’s more than just, like I said, buying a bunch of accounts and a bunch of old equipment. [00:34:00] We’re buying people, we’re buying relationships. And that I think is where maybe we are a little different. Anybody can pay the highest multiple. But if you really want to see your business continue and flourish and your people that helped you build it, I think we could be a great opportunity.

Craig Castelli (34:27):

I think so too. Everybody who’s watching who’s [00:34:30] interested, please reach out to Lee or check out The Greenery. Lee, this was a lot of fun. Thanks a lot for joining us here on The Close.

Lee Edwards (34:36):

Thank you very much. I enjoyed the conversation.