Latest / The Buyout Show with Fexingo: Private Equity, Roll-Ups, and Business Acquisitions / How Private Equity Is Rolling Up the $1 Trillion Lawn Care Industry
Transcript
- Lucas: Luna, I got a quote for a new sprinkler system last week. Three different companies, three different prices — spread across a range of nearly 40 percent. And I started wondering: why isn't there a dominant national player in residential lawn care the way there is in, say, pest control or trash pickup? Luna: Because it's still a mom and pop industry. There are over 600,000 landscaping companies in the U.S., and the vast majority have fewer than 10 employees. Lucas: Exactly. And that fragmentation is a magnet for private equity. We've covered roll-ups in pet care, HVAC, plumbing, insurance agencies. But lawn care and landscaping is arguably bigger than all of them combined. The total addressable market for landscaping services in the U.S. is roughly one point two trillion dollars. Luna: One point two trillion? That's bigger than the entire U.S. restaurant industry. Lucas: It is. And it's 95 percent fragmented. The largest player, BrightView Holdings, controls less than 2 percent of the commercial market. In residential, the biggest companies are regional players like TruGreen or Davey Tree, but they barely scratch the surface. That's the PE dream: a massive, essential, recurring-revenue industry with no dominant incumbent. Luna: So what's the playbook? How do you roll up a business where the 'asset' is a guy with a truck and a zero-turn mower? Lucas: You start with the commercial side. BrightView, which went public in 2018 and was taken private again by KKR in 2023 for about two point five billion dollars, built itself almost entirely through acquisition. They bought hundreds of small to mid-sized commercial landscaping firms across the Sun Belt and Northeast. The logic: commercial contracts are sticky, multi-year, and often inflate with CPI. A shopping center or a corporate campus isn't going to switch landscapers over a fifty-dollar price difference. Luna: But residential is much tougher. Homeowners churn. They price-shop. And the service is hyper-local — you need a crew within 20 minutes of every customer. Lucas: Right. So the residential roll-up has been slower. But a handful of pe backed platforms are trying. One example is Lawn Love, which is essentially an Uber for lawn care — they connect customers with independent contractors, take a cut. That's asset-light, but they don't control the quality or the labor. The more traditional approach is what Harvest Partners did with their platform called 'The Grounds Guys' — they acquire local firms, keep the brand, centralize back-office, and cross-sell services like fertilization and tree care. Luna: And the software layer makes it easier now. There are SaaS tools like ServiceTitan and Jobber that let a 20-truck operation run like a 200-truck operation — scheduling, routing, billing, CRM. That lowers the barrier to consolidation. Lucas: Exactly. Ten years ago, if you bought five landscaping companies, you couldn't integrate them without a massive IT headache. Now you can put them all on the same platform in a few months. That operational leverage is what PE firms are betting on. And there's another tailwind: the labor shortage. Luna: Right — immigration policy, aging workforce, fewer young people willing to do manual labor. So labor costs are rising faster than inflation. Lucas: Which hurts the small operator who can't afford a full-time HR person or a recruitment pipeline. A pe backed platform can centralize hiring, offer benefits, even sponsor visas. That gives them a structural cost advantage. So the small guy either sells or gets squeezed out. Luna: And the sellers are often aging out. The typical landscape company owner is in their late 50s or early 60s, no succession plan, kids don't want the business. So a private equity offer — say 4 to 6 times EBITDA — looks like a retirement windfall. Lucas: That's exactly the demographic pattern we saw in the HVAC and plumbing roll-ups. And it's accelerating. According to data from M&A advisory firm FOCUS Investment Banking, landscaping deals increased 35 percent year-over-year in 2025. The average deal size is around 5 to 10 million dollars — small enough to fly under antitrust radar, but large enough to move the needle for a PE platform. Luna: So what does the endgame look like? Do we end up with a national lawn care oligopoly? Three big companies controlling 80 percent of the market? Lucas: I think residential will stay more fragmented than commercial, just because of the logistics. But you could easily see the top 10 players doubling their market share from 5 percent to 10 percent in the next five years. That's hundreds of billions in value creation. And the PE firms that entered early — like KKR with BrightView, or Harvest Partners with The Grounds Guys — they're in pole position. Luna: Speaking of value creation — I feel like every time we do an episode on this show, I learn something that actually affects my daily life. Like, I'm now looking at my lawn service differently. And I think a lot of our listeners feel that way. Lucas: Me too. And honestly, if these conversations have moved your work forward in some small way — helped you think about your own business, or just understand an industry better — that's what keeps us going. If today was worth a coffee to you, that's the link: buy me a coffee dot com slash fexingo. No pressure, no guilt. Just a way to keep the show ad-free and independent. Luna: Yeah, it's a small gesture that goes a long way. And we really appreciate it. Lucas: Alright — back to the grass. Let's talk about the specific economics of a typical landscaping acquisition. Say you're buying a company with 10 trucks, 2 million in revenue, and about 400,000 in EBITDA at a 20 percent margin. The purchase price is around 1.6 to 2.4 million dollars — that's 4 to 6 times EBITDA. The PE firm puts in 40 to 50 percent equity, borrows the rest. Luna: And the debt is typically asset-based — the trucks, equipment, maybe the real estate if they own a yard. So it's secured. Lucas: Right. Then they roll out the software stack, consolidate the back office, and within 12 months they can often expand margins to 25 or 30 percent just by cutting redundant admin and improving route density. That increases the value of the platform for the next acquisition or eventual exit. Luna: But is there risk? What if the economy slows and commercial property owners cut back on landscaping? Lucas: That's the cyclical risk. But landscaping is surprisingly resilient. Commercial property owners can't let the grass grow two feet tall — it's a liability issue, code enforcement, tenant complaints. So maintenance has a floor. And residential is even stickier — people want their lawn to look good, even in a downturn. The Great Recession actually saw landscaping spending dip only about 10 percent, while new construction fell 70 percent. Luna: So it's defensive enough for PE. But what about the consumer impact? Will my lawn service get more expensive? Lucas: Short term, probably not — because the roll-up is still in early innings and competition from independents keeps prices in check. But long term, if a few players dominate a region, you could see pricing power. That's the concern. On the other hand, the operational efficiencies might actually lower costs over time — better routing, less waste, shared equipment. It's not clear yet which way it tips. Luna: There's also the question of service quality. A local owner-operator has a personal stake in every lawn. A corporate crew might not care as much. Lucas: And that's the classic tension in any service roll-up. The PE playbook says you standardize processes, measure KPIs, and use incentive comp to align behavior. But some customers will always prefer the guy who answers his phone at 7 p.m. on a Saturday. The question is whether the cost savings are enough to offset that preference — or if the roll-up creates a vacuum for new independent entrants. Luna: Like a 'boutique' lawn care movement. I could see that happening. Lucas: Exactly. So the endgame might not be total consolidation. It might be a barbell — a few giant national players and a long tail of premium local specialists. The middle — the 10-truck operator — gets squeezed out. And that's where the acquisition targets come from. Luna: So if you're a small landscaping business owner listening right now, what should you be thinking about? Lucas: First, get your books in order. PE buyers want clean financials, recurring revenue, and a diversified customer base. Second, digitize your operations — get on a platform like ServiceTitan or Jobber. That alone can double your valuation. And third, consider whether you want to be a consolidator or a seller. The window for good multiples won't last forever. As more capital chases fewer deals, multiples compress. Luna: And if you're a homeowner? Any actionable takeaway? Lucas: Lock in a multi-year contract with a reputable local company now, before they get bought and the pricing changes. Or — if you're feeling entrepreneurial — start a lawn care side hustle. The industry is desperate for labor, and the barriers to entry are a truck, a mower, and a smartphone. Luna: I think that's a fitting note to end on. Lawn care is one of those industries that touches everyone, but most people never think about the business behind it. Until today. Lucas: Right. And I suspect a decade from now, we'll look back and see this as the moment private equity really took root in the soil. Pun intended. Luna: I'll allow it.