Inside the deal

Just two years after Jonathan Saperstein purchased TreeTown USA from his father, the 30-year-old CEO made another deal. TreeTown USA acquired Village Nurseries, a California grower, in a deal announced at the end of September.

The acquisition gives TreeTown USA more than 4,000 acres on 16 farm locations throughout California, Florida and its home state of Texas. Read more about TreeTown USA’s growth strategy in our April 2017 cover story: http://bit.ly/TreeTownUSA.

We spoke with Saperstein about the impetus behind the acquisition and how he’s handling the integration of a 900-acre production facility.

In any type of acquisition, there has to be a cultural fit. When we first started taking a look at them during our due diligence process, that was a big focus for us. Village Nurseries is a more than 40-year-old company with an excellent management team, and it really fit like a glove with the culture we have at TreeTown USA.

California has always been a market that we’ve been interested in entering. When you combine that with our Texas and Florida operations, it will help us diversify our operations and become more of a national presence. However, we weren’t out there seeking an acquisition. This was something presented to us as an opportunity. Once we started to look at it, we realized it was an opportunity we couldn’t pass up.

There’s a lot that goes into it. Village Nurseries has been around a long time and has a great management team. It’s not something we need to come in and change. We’ll take our time to fully integrate the companies. They will continue to operate under the name Village Nurseries as our West Coast division, with the same leadership team in place.

From a systems perspective, and really the rest of the integration process, we’ll work through that on our pace without disrupting our customers.

Yes. In order to do that, we’ll have to implement our ERP system. They do have a system at Village Nurseries that is perfectly fine. It’s able to produce accurate numbers and provide a good sense of the business. However, over the next few months we will be integrating and implementing our systems in the California operations. That will allow us to have greater visibility, and quite frankly, the Village Nurseries team is excited to see that level of detail.

We are adding roughly 900 acres of production capacity to our current operation, so it is a significant increase, but the biggest difference is driven more by mix. Village Nurseries produces significantly more shrub material, perennials and succulents as a percentage of their business.

Yes, and that’s one of the most exciting parts about this acquisition. Our sales team in Texas, as well as some of the other parts of the country, has already begun to offer that material to our customer bases. So far, the reception has been very strong. We’ll continue to work to refine the mix, as well as add those items to service our customer base. There’s also material that goes the other way, as well. We’re going to bring some of our proprietary items over to the California business, as well as some items that are known in Texas and Florida, grown in different forms or with slightly different genetics.

They’re a little bit more seasonal than we are. But in reality, that’s another item both companies have that is unique in our side of the business — that we can, and try not to be seasonal. There is a slight increase in head count in spring, but in all reality, our head count between the lowest months and the highest months is roughly the same. Neither company looks to bring on true, what you’d consider temporary employees. A lot of nurseries bring on 90-day employees for springtime — that’s not something either company has had to do in the past and that’s not something we’re looking to change.

NM: What are the challenges of operating in that way, and what are the advantages of making it work? JS: There are a lot of advantages to being able to offer employees full-time positions: not having to retrain employees, not having to bring people on with the understanding that this is a temporary job. By bringing everyone in as a full-time position, we’re able to not only train them but acclimate the employees to our culture and make them part of our team.

When you look at it from a seasonal perspective, there are some benefits. You can mirror your costs closer to your revenue. You do have to go through a very difficult process of a big spring surge when you must hire huge amounts of employees for a relatively short time. That can be a challenging process.

We plan to retain the vast majority of the employees. In a lot of these acquisitions, companies have learned to paint in a light that tries to make it look as positive as possible, when in reality you’re having to let go of a significant percentage of a workforce. This is an acquisition that not only was a great fit that made a lot of sense for us, but also has the added benefit of not needing to make a lot of cuts. We’re going to be able to bring over essentially all the employees.

It’s an exciting time for both companies. We’re a much younger company than Village, but we’re able to take two companies with different processes and philosophies, and be able to merge those two together to create what we feel will be industry-leading best management practices. We talk about systems, which are a strong suit of ours. We’ll bring that over to Village. But at the same time there are a lot of things Village does that, quite frankly, are amazing to us. We’re going to share that across our legacy organization. The operational teams are working on consolidating our various processes.