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Retiring & selling the company nameBy Tom Hatlen
Bill and Gail Gardocki decided it was time to retire. Their son Tom had worked in the company for years and ran everything for most of 2017 when Bill had a stroke. But, Bill says, “We knew years ago he wasn’t going to take over our company. Tom had started his own site work company 8 years ago. He still worked with us 2 days a week, but he’s really focused on his excavating business.”
Bill says, “We went into it planning to sell all of our equipment, our tools, our inventory. And that would be it. We sold everything in November and December of 2020.”
Then Tom suggested they also sell the company name, Interstate Landscape. The company’s stellar reputation and profitable track record of 40 years should be of value to another contractor looking to expand in the hardscape market.
But it seemed like a long shot. The experts they talked to knew of no comparable hardscape installation companies that had sold the company’s name. Interstate Landscape was small by choice (6-8 people) and heavily reliant on the owners. Aside from 2017, Bill worked on the crew every day. He was the face of the company handling all sales and nearly all customer contact. And, the company didn’t have any maintenance-type recurring contracts for a new owner to just step into.
The common wisdom is that these types of companies are only worth the value of their assets, their equipment and facilities.
Yet, on March 30, 2021, the entity, Interstate Landscape, alone was sold for 6 figures. No equipment, real estate, etc. was included. They have a 3-year term, payments due quarterly with the first payment due July 1st.
What closed the sale?Gail says the keys to the sale were reputation, proof of profitability and Bill agreeing to stay on part-time for 2 years to help the new owners learn what they needed to do to continue that reputation and profitability.
“The new owners said to us at the closing that they want to continue the business how we ran our business.”
The new owners had a feel for how the Gardocki’s ran their business after working in the same market for several years. They operated a lawn maintenance company, had been hardscaping for a few years, and had seen Interstate Landscape’s highly mechanized operation in action.
Word gets around in the community from clients and past employees, but Bill says they didn’t leave their reputation to develop by chance.
“We always did things looking at the long-term. We made a fair profit, but it wasn't, ‘What can we get in our pocket out of this customer today?’ We're also highly involved in community service projects. A small project that you do every year or so will show you care about your community, instill pride in your crews, and is great publicity.”
Proof of profitabilityOf course, before any sale, a prospective buyer needs to know if the company is making money. Gail worked with an advisor involved in valuing companies to produce the numbers to prove profitability. She says in addition to presenting their Balance Sheets and Income Statements, there are 3 variables a buyer needs to know.
“One, I would call personal expenses like health insurance premiums. Another is the owner's income. And the third thing is asset depreciation. Without taking these things into account, you can’t see how much a company is truly making.”
Bill’s role in salesIn purchasing the company, the new owners also got Bill, on a limited basis. Bill is working 10 hours a week doing hardscape sales for this year and next year. He’s paid a healthy hourly wage.
As of mid-June he had booked both of their hardscape crews for the duration of 2021. He started the season with one of the new owners joining him on sales calls. “It didn’t work having more than one person go on a quote because the client kind of feels ganged up on. Within a month the new owners asked me to just do all of them by myself.”
So, they’re looking at ideas to transition sales to the new owners for next year. The new owners are, however, doing the pricing, setting the hourly rates for Bill to apply when he bids a job.
Bill says, “Gail showed them how we did pricing but they need to apply their own overhead costs, etc. My job is the same as any salesperson bidding jobs. I get pricing from the owner and apply it to each project.”
Training efficiencyAt the start of each job Bill gets the crew set up and usually doesn’t return to the site until the final walk thru. “Not being on the job anymore, I'm learning that I have to write down a lot more information to pass on to the crew. The foreman and I only go over the important things because if I tell him 100 different detailed things, he's only going to remember 5 of them.”
When the job is done Bill inspects it and reviews the numbers to make sure it came in under the estimate. “Efficiency is one of the big things that I'm trying to bring to the new owners.
“When a job takes longer than it should, I'll ask the foreman, ‘Well how did you do this? How did you do that?’ And he’ll say, ‘Well, we traveled 3 or 4 times back and forth to get materials.’ And I’ll say, ‘It’s much better to just pay for the delivery so all materials are on site when you get there. You're taking a guy off the job site for hours where he could be efficiently working.’”
Bill says 2 of his 6 employees stayed on and the new owners and their employees are learning fast and they’re much more efficient today.
Running the business the sameThe new owners understand that it is the complete package that made Interstate Landscape profitable – the processes they use, the tools & equipment, crew size & skills, type of work & optimum project size for their crew, equipment and processes.
Bill says, “Our sweet spot is the $10,000 to $20,000 job, in and out in 3 days, boom, paid – half the payment the day we start, the final payment the day we’re done. We have never done any billing. The new owners had been tackling a few large jobs which they billed. Sometimes they didn’t get paid for months. As of next year, they're not doing any more big jobs.”
Even though the new owners are doing their best to follow in the Gardocki’s footsteps, it’s difficult to sell a company that is synonymous with your name.
Bill says, “It really hasn't hit me yet since I'm really still the face of the company. But, it is very nice not having to think about the company all the time.”
Gail adds, “We knew the new owners and the type of people they are, so that really helped a lot. We weren't going to sell unless we found the right people and got our price. When you invest your whole life, almost 40 years, selling is tough.”
Bill and Gail Gardocki owned Interstate Landscape Co. Inc. in Londonderry, NH, installing hardscapes for over 40 years. Bill has taught over 100 classes as an NCMA and ICPI certified instructor. He also provides hardscape seminars for dealer/contractor education days, and in 2013 became the Landscape Construction instructor at his alma mater, the University of New Hampshire. Contact firstname.lastname@example.org