Vincent Farrell has spent years building a successful, lucrative and trustworthy business in horticulture – but an offer, out of the blue, to buy the businesshas him wondering if he should hand it over or if, as his parents suggest, he should hold on tight and keep building, writes OLIVE KEOGH

FROM THE TIME he was old enough to climb, trees fascinated Vincent Farrell. When he was a kid, his treehouse was the envy of his friends and his big ambition was to go to the US to see giant Sequoia in all their resplendent glory.

Following a degree in horticulture, Farrell studied forestry at postgraduate level and spent time working in New Zealand before going to work for a large firm of landscape architects in the UK.

The firm was particularly active in the area of low maintenance planting for public spaces and one of Farrell’s jobs was to source plants and trees suitable for this purpose. He spent a lot of time travelling in the UK and Europe looking at nursery stock and was surprised by just how limited the options were. The same plants were being used over and over, and Farrell could see that there was a big appetite for new plants that would meet the low-maintenance criteria but were different to what was on the market.

With the blessing of his boss, who promised to be his first customer, Farrell returned to Ireland 12 years ago to set up a small nursery on his parents’ farm in Co Meath. His father had all but retired so there was plenty of land available to expand if the business took off. Both parents took a keen interest in the nursery and his mother ran the office while his father helped out with the planting.

The first five years were a hard slog with very little money coming in as Farrell ran extensive plant trials. He knew that planting schemes for commercial use had to be able to survive the most hostile conditions, as replacing them was expensive and time-consuming for maintenance companies. He decided it was worth taking the time to develop a mix of plants, shrubs and trees that would do their job effectively from the beginning and began testing plants in situ in a number of urban settings through contacts he had made while in the UK.

Farrell launched his first catalogue in the UK in year six. He took on two full-time employees to keep things ticking over at home, while he personally delivered orders to the UK as a way of building a profile for his company. Customers were very pleased with the quality of Farrell’s product and valued his experience of their business, trusting him to make recommendations to suit particular schemes.

The company’s reputation grew and Farrell began to receive enquiries from Europe. This triggered a whole new development phase as he began looking at plants suitable for warmer climates.

By the end of year eight, Farrell had a thriving small business employing eight people. His parents had stepped aside to make way for full-time staff but they still provided help, particularly financial backing, for the venture. Farrell’s father was averse to borrowing and had tried to ensure that his son’s business relied as little as possible on outside money. Farrell had been far more laid back about borrowing but, under pressure from his parents, had kept it to a minimum. Given the speed at which the economy has since deteriorated, he is now very grateful for his father’s prudence.

Most of Farrell’s business is conducted in England, Scotland and Wales so, while he has felt the pain of exchange rate fluctuations, his sales have remained steady there – unlike in Ireland, where new business has virtually dried up. In 2008 Farrell appointed an enthusiastic young general manager to run the business day to day, leaving him to look at new income opportunities.

One area of interest has been developing low-maintenance planting schemes for domestic buyers, using plants new to the sector. He is still at the testing stage but expects to have a small catalogue available next year, which he will offer to landscapers and garden maintenance companies. Again, he plans to target the UK as he believes the Irish market is too depressed.

A year ago Farrell received a phone call out of the blue from a Dutch nursery looking to order plants. Given the Dutch growing heritage, he was chuffed by the approach.

Farrell has a policy of meeting all new customers and went to the Netherlands with the consignment. He got on very well with the nursery owner, Wim Jansen, and found they had a lot in common, having both started their businesses from scratch.

The Dutch nursery is about four times the size of Farrell’s operation and is highly slick and automated, with extensive markets in mainland Europe. Seeing the scale of the operation gave Farrell food for thought as to how far his business could develop. Subsequent orders followed and, three months ago, Jansen asked to come and visit.

The visit went well. However, on the way to the airport Jansen dropped a bombshell. He would like to buy Farrell’s business – lock, stock and barrel. Selling had never crossed Farrell’s mind and the offer took him completely by surprise. Jansen told him to think about it for a few weeks and he has been in a quandary since.

The detail of the offer has not been spelt out, but Jansen has offered Farrell a number of alternatives to consider. He is happy to buy the business outright but the price reflects the current economic climate here and Farrell believes it seriously undervalues his business.

Jansen has also offered to buy a 50 per cent stake in the business for a slightly better price, but this is conditional on the operation being rationalised and the day-to-day running being handed over to one of Jansen’s managers.

The third offer is an upfront payment with a three-year earn out agreement, dependent on performance. Of the three Farrell thinks this might be the best option as it would involve the least disruption to the status quo and would allow existing employees time to move on if they wanted before the Dutch takeover. The downside of this option is that Farrell thinks the next three years are going to be tough in trading terms, making an earn out seem fairly unattractive.

When Farrell told his parents about the offer there was a long silence before his father pointed out there was another option. Just because an offer had been made didn’t mean it had to be accepted. He agreed it was flattering to be approached but cautioned his son against getting carried away on this basis.

His father also raised a very valid point about having to relocate the business as he would be reluctant to sell his land to outsiders.

Vincent Farrell senior’s view is that his son should refuse the overture, keep his head down and continue developing the business.

He believes the business has the potential to get a lot bigger and thinks his son should be taking a much longer, more strategic view of where he wants to be in 10 years’ time.

Farrell junior has pointed out that a sale would enable him to repay his parents’ loans to the business at a time in their life when extra cash might be needed for healthcare issues. His father quickly brushed this argument aside as a red herring and is holding steadfastly to his view that his son would be mad to sell.

To sell or not to sell?