Anticimex Sells 19% Stake, Implied Enterprise Value of $2.7 Billion

The majority owner of Anticimex, EQT Vl, a Swedish private equity firm, has entered into an agreement to sell a 19% minority interest in Anticimex to AMF, AP6, Volito, and Cubera.

Potomac estimates Anticimex’s 2018E EBITA to be approximately $115 million, which would imply a forward 2018E EBITA multiple of 23.4x, or $2.7 billion.

As negative yields prevail across the continent, European funds continue to flow into the global pest control industry following the unprecedented move by the Swiss National Bank to make a direct equity purchase of Rollins (NYSE: ROL) stock earlier this year.

Legal Viewpoint: Understanding and Mitigating the Holdback in an M&A Transaction, a Sell-Side Perspective

By Mike Stanczyk, Mergers & Acquisitions Attorney

So you’ve decided to sell your business. You’ve grown the business’s revenues over the last couple of years through blood, sweat and possibly some tears.  You want to get full market value for it, as you should.  So you work with an expert to determine a reasonable valuation for the company and enter into negotiations with an acquirer, or hopefully, multiple acquirers. [Read more…]

The Curious Case of Western Exterminator: How One Mistake Cost the Shareholders Millions on Their Sale to Rentokil and How You Can Avoid Making the Same Mistake

On the morning of November 29th, 2011, I arrived at the offices of the wealth management firm Greycourt & Co. in Pittsburgh to meet with David Lovejoy, the grandson of Ray Lovejoy, one of the founders of Western Exterminators (“Western”). At the time, David was the head of a voting block (one of three) that controlled about 40% of the equity of the business.

I was in Pittsburgh that morning on behalf of our client, Scotts LawnService (“Scotts” or “the Company”). The President of Scotts had recently engaged Potomac to advise Scotts on its formal entry into the pest control industry. [Read more…]

PCT 100 — 15 Trends That Shaped the Industry

In the May 2016 issue of PCT Magazine — the PCT Top 100 issue — Anne Nagro interviewed managing director Paul Giannamore on mergers & acquisitions and door-to-door sales. You can download a PDF of the article here: PCT Top 100 – 15 Year Trends. [Read more…]

Do You Make These Mistakes with Your Pest Control Employment and Non-Competition Agreements?

We all remember the scene in the movie Jerry Maguire when Jerry finally has had it with his client Rod Tidwell. He corners Rod in the locker room and makes the following emotional appeal:

I am out here for you.Help Me Help You

You don’t know what it’s like to be ME out here for YOU!

It is an up-at-dawn, pride-swallowing siege that I will never fully tell you about, ok? Help me… help me, help you Rod. Help me, help you. HELP ME…HELP YOU!

While my job is not always a pride-swallowing siege, I often find myself in similar conversations with clients. One area that I find myself discussing more than I’d like is the topic of employment agreements. Like heart disease, they’re a silent killer. Not everyone will have issues with them, but those that do are often in for a real ass whipping. [Read more…]

Five Mistakes That Will Cost You When You Sell Your Pest Control Business

In its January 2014 edition, PCT Magazine recently distilled the wisdom and core message of Paul Giannamore’s presentation at the 2nd PCT Magazine Virtual M&A Conference. You can download the article here:

5 Mistakes That Will Cost You When You Sell Your Pest Control Business

The article discusses these five major mistakes that cost sellers dearly: [Read more…]

Pest Control Revenue Multiples and Rules of Thumb Lead to Serious Mistakes

In all my years as an M&A advisor, I have never…. Let me repeat that, I have never, ever seen an industry so littered with rules of thumb than I have since I began working in the pest control industry.  Pest control companies sell for:  “One times sales”… “dollar for dollar on revenue”… “1x recurring sales… etc.”

Everyone you talk to knows exactly how pest control companies are valued and everyone has a very simple solution to your valuation issues and concerns – a simple rule of thumb.  Buyers and sellers who rely on this nonsense generally get what they deserve, they overpay for a target or sell their pest control business for much less than they should have. [Read more…]

Have Pest Control Acquisition Multiples Hit Their Zenith? Valuations Up Almost 150% in a Decade

Picture this for second.

We just jumped into a time machine and went back in time exactly 10 years — it’s now September 15, 2003. We landed at a closing table whereupon an owner was about to sell his pest control business for exactly $10 million. We quickly grabbed the seller and all of the documents from the table (financial statements, operational information, etc.) and brought them back with us into the future, to a closing table, on September 15, 2013. All else being equal, that seller would be receiving a wire transfer for $14.6 million, instead of $10 million. [Read more…]

Why My Father Chose Orkin…

Orkin-Logo-on-whtDownload PDF of this Article

Introduction

Today’s edition of The Potomac Pest Control Executive is a personal story. It recounts the experience my father and I had as we shopped for termite and pest control services for his home.

As executives and owners, it’s often very difficult to view our sales and marketing process through the eyes of an uninformed prospect.  [Read more…]

Personal Goodwill Hunting – Bifurcating Personal & Corporate Goodwill in the Pest Control Industry

1. Introduction

An overview of the tax ramifications of the sale of a C corporation’s assets and how the sale of personal goodwill as an asset class can offer a seller substantial tax savings

Over the next few years, a considerable number of pest control operators will exit their businesses and retire.  Many long-established pest control companies are organized as C corporations, which creates serious tax issues for both buyers and sellers.  If you own a pest control company organized as a C corporation (or an S corporation subject to built-in gains)[1], you are likely staring down the barrel of a nasty tax cannon that can eat up more than 50% of the sale proceeds due to oppressive double taxation.  [Read more…]