Paul Giannamore: Jay and Jared, welcome to San Juan. Good to have you guys here. We're going to talk about this exciting transaction, Pointe Pest Control, Green Pest Services, and PestCo. Jay as CEO. Jared, are you the president? Do we know yet?
Jared Borg: I’m not sure that's even been established, the man behind the curtain.
Paul Giannamore: Maybe we can figure that out right now. Jay, let's talk a little bit about PestCo. Tell us, what's the deal?
Jay Keating: I made our first acquisition back in October 2021 with Presto out of the Philadelphia area. Presto is a commercial pest control company focused heavily on restaurant management and do some multifamily. Our second acquisition was in Texas and the Texas group is Ecoteam and Envirotrol. That group specializes in multifamily and has found a way to make the multifamily pest control business profitable and extremely effective. We've added the quintessential residential company to our portfolio by bringing Jared’s team in with Pointe and Green.
The reason for these acquisitions is to find people who specialize in specific areas, find the talent within those groups, grow that talent, and start to cross-pollinate within our geography to bring, for example, multifamily into the DC area where we're going to be going with Eco next. Also, bringing residential into Texas with Pointe into the Eco area. The reason for that is because we believe that you grow a company by growing its people. We're excited to see what the people that we've gained as a result of these acquisitions, what they're able to do over the next few years as we grow the company. It's exciting.
Paul Giannamore: Let's take a step back for a second. PestCo is part of Thompson Street Capital Partners out of St. Louis. It was in 2021 when I got a call from Jeff Aiello, one of your partners there at Thompson Street and he said, “I want to get into pest control.” I said, “Okay. Don't waste my time.” Quite frankly, these private equity guys are a dime a dozen. I get calls from these guys all the time. They want to come in, buy these businesses at five times LTM and EBITDA, which that's not what the market is at. They look at the price tags and they run away. Jeff said, “I'm not that guy. I have studied this industry. I want to get into it. I like the dynamics.” I said, “Okay. Fine.”
We started to get Thompson Street involved in some processes. The first acquisition was Presto. We took that business to market in 2021. Jeff and the team liked it and decided to buy it. At the same time, they were out looking for a CEO of PestCo. They went out, they did a search, and they stumbled upon you. Where did you come from? How did you get here?
Jay Keating: I was fortunate enough in my career. When I got out of school, I started with All-America Sears Termite and Pest Control and Chuck Steinmetz as a service technician. We worked with that company for thirteen years leaving as the chief operating officer of the organization. We sold Sears Pest Control to the people at Terminix and I went to work for Rollins. I went for the Rollins family for almost thirteen years.
About 25, 26 years into my career in pest control, I was recruited away by a construction organization in Central Florida based in Orlando where I didn't have to do much traveling. My children were accomplished athletes, and I had the opportunity to stay at home and watch them in those developmental years. I spent the next seven years as the president and COO of a construction company in Orlando, doing floors, cabinets, and countertops in new homes.
I got reached out to on LinkedIn. I was fine where I was. I started having the discussion with Jeff and became extremely interested when Jeff told me about his passion for founder-owned businesses. That's what Thompson Street does well. If you look at their portfolio, even outside of pest control, you'll find out that when they have founder-owned businesses and route management, people in trucks doing services or supplying materials, they're effective in growing those businesses.
I saw that portfolio and I was comfortable with the industry. I've known the pest control industry for over 25 years so what a great opportunity for me. My last child graduates from college in 2022 so that side of the equation is settled. I can now travel again and I’m looking forward to it now. I get to meet people like Jared, our people at Presto and Eco, and start to grow this organization to become a real player in the business.
Paul Giannamore: In August 2021, PestCo was doing zero, it was an idea. Now, February of 2022, the business is doing roughly $40 million per annum. I've got a lot of questions for you on this but before I get to that, I'm going to talk to Mr. Borg. I've known Jared for a long time. I never suspected he and I would ever be sitting down having this conversation and here we are. Jared, you are a meaningful participant in this new business venture. You didn't sell that business and run away. You got super stoked about getting some growth capital for that business and growing the crap out of it. Here we are. How did we get here?
Jared Borg: I can probably point to a few different things. One, it's a midlife crisis. I needed a change of pace. A midlife crisis isn’t a good way to put it but 5 years in the door-to-door industry and 16 years as a founder. We’ve grown away from that door-to-door model. There was a chance where you could turn into everybody else. If you look at the PCT Top 50 and if you're not doing door-to-door and you're not doing acquisitions, you're growing at high single digits and it's boring, frankly. There's not a big challenge there.
We developed great team members and created a lot of great systems and processes. We pushed through that challenging phase. You see this a lot in businesses in that $5 million to $7 million range where it's like, “I’ve got to get everything dialed or I'm done.” We pushed through that $20 million in 2021 and things are going awesome. I’m excited about a new challenge. There's definitely some intersectionality between listening to the propaganda and the market rates. Also, that opportunity to either be someone's entry into the Midwest because we're doing well there or someone's entry into a platform. Thompson Street checked both those boxes for us.
Paul Giannamore: You had the opportunity to do a 100% change in control transaction but yet you decided, “I want to stick with this.” Why?
Jared Borg: That's what my wife asks me every single day, “Are you sure you want to do this?” There are a few reasons. One, when you go through this process, you get a little sentimental. One of the things I've realized is that, in my entire life, I've almost always worked with my friends. Early on, that was difficult. When you're running summer sales programs, your friends are screwing off and you're firing your buddies. That's an awkward relationship.
Mostly, I got good at working with the right friends and developing good relationships. I have good sharp people, and I become friends with people. I wasn't ready to end those relationships and I wasn't ready to end that part of my life so this was a good balance for that. At 41, my kids are still in school. I don't have a bunch of other friends with unlimited time and resources. What am I going to do with myself? This was a unique challenge for me to pair with Jeff and Jay and give me a blank check to grow Pointe and Green. There's a real attractiveness to protecting those brands, seeing those flourish and those people taken care of, and bringing them along for the ride. That's a good opportunity, and we took it.
Paul Giannamore: You're effectively able to take advantage of high valuations in the market and take some proverbial chips off the table, but also remain an equity holder. In your early 40s, you weren't ready to sit around and do nothing. Here's a question I have for you, Jay. You're the CEO of PestCo. You're still based out in Florida. Jared, it appears, is going to be the president of the residential platform. He'll continue to drive growth at Pointe and Green. Kyle Woodbury, who's a great guy and was your partner for over sixteen years, helped you build that business from scratch. You two are in the trenches together.
Jared Borg: He’s a super-sharp guy.
Paul Giannamore: He’s a great guy. When you think about growth, one of the things that you mentioned to me is seeing all these private equity guys come into this space. There's that private equity playbook. It's a consolidated and fragmented market. Let me go out and buy crap all over the place. The next thing you know, I own all these disparate geographies and divisions. The one thing that I've appreciated about Anticimex is Jarl’s discipline in acquiring platform businesses like Pointe, going out buying small businesses within that particular market and blending down the entry multiple. We have these conversations with Mike Gilvin over at Certus. I clearly have these discussions with Jeff all the time.
When a private equity firm gets the first platform or two, then you’ve got to figure out how to grow. Sometimes you have to be opportunistic. Sometimes there's a platform available far away and you're like, “It's here. It's now. We’ve got to get it.” Jay, when you think about growth, you talked about Texas. I would understand why you would think about bringing Pointe down to Texas because you had that commercial operation in the state of Texas all over. What's your growth strategy from a geographic perspective? What do you think about that?
Jay Keating: We grow around where we are now in specific areas. What's nice about this is that Pointe is our residential platform but now that we have Pointe and the expertise that Jared and his team bring to that, we not only have the area in Chicago or the Midwest but we also have DC, Virginia, and Texas. We can now take Pointe and make it ubiquitous in all three of our platform areas. The nice part about our three platforms is they are in three different areas. It’s going to allow us to start bleeding between the three or start blending those organizations together. Growth in multifamily.
Our next greenfield operation, originally for Eco, was not going to be in Washington, DC. Now that we're already platformed in Washington, DC and we did the market research and found out it's the sixth-largest apartment unit demographic in the country, it’s a great opportunity to take the learnings. It’s a great opportunity to take the learnings that the Polenz brothers bring to them in moving multifamily, inserting them to the Washington DC market using some of the oversight we have available to us through Presto in DC and building that business quickly.
Paul Giannamore: When you think about this national platform that you're building, do you have any particular aspirations in terms of size or geographic scope? What are you thinking about that?
Jay Keating: We're months into it now. We can be as big as we want to be. We continue to attract talent like the talent we've got so far. That's an important part of our decision-making. What are we getting with the deal? What do these companies look like? Are they well-run? Are they well-organized? Do they bring a lot to the market? When they do, you're able to take those people and help them get to another level.
I was fortunate in my career. I started as a technician. I was exposed to some of the guys in this industry who people have looked up to. I’ve worked for Chuck Steinmetz and John Wilson. I had the opportunity to work with Greg Clinton and others. It’s people like that who have been in the industry for a long time. It's not that everybody has all the right answers but it's nice when you can have that many different people influence the way you think about something and give you an understanding of what might happen in the industry from different perspectives. Bringing in people like Jared, the people over at Presto, the Polenz brothers at Eco, there's more of those smart people. When we think about it together, we can make almost anything happen.
Paul Giannamore: When I think about the businesses that you folks have acquired thus far, Pointe, Green, Presto, all of which I know intimately, on the one hand, you’ve got a big private equity firm with a lot of capital. You've got you coming in with more of the institutional pest control background like Rollins and Sears, for example. I look at guys like Jared and Kyle. When I look at Jared’s brother who rides around on a skateboard, he's my age, these guys have grown fast-growing businesses. Jared has been off the doors for a long time. Great top-line growth, extremely profitable, young team, and super motivated. I know that in his business they worked hard on building the culture. I wonder how somebody like you sits back and says, “I'm a Rollins guy. I bleed red.” You come from the old school like Sears and Rollins. Is that not right?
Jay Keating: That’s not correct. I’d have to differ with you. Traditionally, Rollins is the standard-bearer for old school. Sears was everything but the standard-bearer for it. When we even did once a year pest control, we were looked at as completely off the rails. Somebody had nothing to do. All those Chucks and entomologists and talented gentlemen did once-a-year pest control. We went to a house one time and serviced it for the entire year. That whole model started from nothing and grew to over $100 million in the span of 13, 14 years.
The reason for that was that it was not an acquisition. It was internal growth spouted by eventual young people with a different idea of things. It’s like what you described with Jared which is one of the reasons I like his organization. What rings true though about the Rollins, Sears, and the Pointes of the world is when you find people that are good, you usually find one specific thing, they are good at getting the metrics of the individuals in the hands of the individuals.
Pointe does a good job of everybody in their company knowing where they stand against what they're supposed to deliver, and they celebrate those deliverables at the truck level. This business isn't won or lost in the boardroom. It's not won or lost by the guys in Atlanta, on Piedmont Avenue, or one of the guys in Memphis, Tennessee. They're wonderful and smart people, no question. The men and women in the trucks, the men and women on the phones win and lose in this business because that’s what customers deal with. The guy driving the route in Chicago is Pointe Pest Control to the customers. In all differences, Jared’s not. To the customers, that's Pointe Pest Control.
Our job is to help to continue that culture building from the bottom up, driving the organization so people in leadership positions can do more. They can take on more scope, more ability, and grow it as you described with Pointe. Who knows how big we can be? You've mentioned that Thompson Street comes with capital, some clout, and an understanding of this business. It makes it exciting for a lot of people.
Paul Giannamore: Speaking of people, how was the announcement with the people? How was your management team? You've had the management team involved here for a while but what do your people think?
Jared Borg: So far so good. Everyone's excited. We brought in our key people early in the process so they knew and there was a surprise. Maybe midway through the process, we brought in field-level management so they knew what was going on. Probably a couple of weeks before, we even brought in everyone, service managers and office managers. Because it wasn't, “Here's a Terminix uniform. I’m out of here,” everyone was like, “Cool. You're staying on. There's an opportunity for growth.” Everything essentially stays the same. It was almost no big deal. It was fun and exciting but their day-to-day life doesn't change a lot.
With some of these guys, you have sharp folks that worked for you for 7, 8 years. If you become that old model, where you're growing in the single digits, you can be a guy that's waiting. Your promotion doesn't happen until the guy above you dies or retires. That's a hard place to be. We have some sharp people we wanted to give opportunities to. The announcement, as far as I can tell, went great.
We posted that. I meant to take a little video recording and show it on our internal platform. What I didn't expect, which is funny, is people telling Kyle and me, “Congrats.” I don't know why that always catches me off guard because I think about us. That always makes me almost uncomfortable because the decision felt less about me and more about them and what we're doing as an organization.
Paul Giannamore: With regards to opportunities, what Jared said about the promotion comes around when somebody dies or retires. I know you guys are early into this. In your mind, Jay, do you have any ideas of how life may change for some of these team members as far as additional opportunities?
Jay Keating: Absolutely. When people are capable and available, meaning that they're able to get to a certain area or help in a certain geography, we're going to have the wherewithal and the resources to grow this business at a rapid rate. We're going to need leaders in new organizations and in new parts of our business. People are going to have to be promoted up to different levels of management.
We started in October 2021. In the next 30 to 60 days, five of the existing people in the first two platforms are taking on more responsibility and being promoted already based on the strategy and on us doing some things that we're already planning on doing. I'm already seeing it work or seeing it happen. I get the opportunity to work with such smart people.
It's those people in frontline management who have seen this, who want what Jared wants, described, or what his leadership team wants. It's the chance to say, “We're not restricted by this. We're thinking about going here. Who's interested? Who wants to play? Let me see if you have the skillsets and you have the right mentality and it’s where you want to go. Let's pick the right people in the right place and let them enjoy the ride.”
Jared Borg: Let me add to that. There's probably a little bit of a strategic shift. We've done a good job of trying not to view it as every time Kyle and I want to create a new position or make an investment because that's one of the things maybe people or founders in this industry struggle with is investing in people or positions or overhead. As an owner, when you invest in those things, there's always this back in my brain, “This is hitting my bottom line. Maybe I don't make as much.” “This project might cost whatever.”
You always get that feeling, “Maybe I won't make that.” It's relieving to make that transition to saying, “I'm taking care of this business. I’m nurturing it and helping it grow.” If I need to make investments, I don't have to justify to anybody as far as the bottom line. It's like, “This is what's right for the business.” That's also a shift that I welcome. I don't have to always be thinking about Jared Borg's bottom line.
Paul Giannamore: You and I had conversations for years about your desire to do acquisitions, but you look at the prices for these targets and you're like, “I'm not going to spend that money.” Are you excited about the opportunity there in the Midwest as well as in the mid-Atlantic to start to do creative acquisitions?
Jared Borg: That's been something we've always loved to do. If you want the magic sauce that everybody has, you're kicking butt organically online. If your techs can sell, you're crushing it and that's awesome. If you can do acquisitions, and now all of sudden, you've got a few different legs of the marketing stool all working together, that's the secret formula. You're setting yourself apart from everybody else.
We felt like we'd dialed in. We backed off the doors a little bit but we'll still use the doors to maybe open new markets or to add some density when you do an acquisition. We've got the online thing figured out. Now we've got a partner that can help us do these acquisitions. There are a lot of opportunities there to set us apart and do some unique things. We're looking forward to that. That's going to be fun.
Paul Giannamore: Where is PestCo based? I know we live in a virtual world now. Where is the HQ of PestCo?
Jared Borg: It's based in the metaverse. Didn’t I hear Seth was going to make a virtual pest control truck?
Paul Giannamore: He was talking about. He's selling real estate in the metaverse.
Jared Borg: We'll service that real estate in the metaverse.
Paul Giannamore: You're in Boise and you're in Orlando. Does it have a headquarters? Have you thought that far ahead?
Jared Borg: It doesn't even matter anymore.
Jay Keating: The key people on my team are in Denver and one is in Dallas. As long as the players are on the same page and everybody’s rowing in the same direction, communication nowadays, with everything online, you don't have to be in the same building. There's one small silver lining of this disaster we've lived with for the last few years, it taught us that you don't have to be in the same building to get stuff done.
Jared Borg: We also found that this is maybe more for these guys that own smaller businesses. The best thing I ever did was to remove myself from the day-to-day operation. We had to build our branches so that we were not there all the time. The worst thing that ever happened was if someone's like, “We can't solve this problem without Jared or Jay.” We have sharp people. We trust and empower them. Headquarters is no big deal.
Paul Giannamore: Effectively you were out in Chicago Metro for the first 2, 3 years while you were building that business, and then you got out of dodge.
Jared Borg: I lived in Chicago for four years and we grew it. We had a smart partner who said, “You guys need to leave,” and it's going to force us to put all the right systems and processes in place. We bought a company called EcoTec in Virginia in 2010 and then we converted that to Green. We used to be out there a lot in the summer to help those programs and then it was less and less. Now, it's funny because it's a compliment to our staff when they haven't seen us for a while. They're like, “They trust us.”
Paul Giannamore: How often do you make it out to Chicago or Virginia? I know that COVID probably slowed you down a little bit but what was your frequency?
Jared Borg: It depends. It used to be that I was out there all the time in the summer. I was there, I was helping the programs, they were busy, and then it hit me. They're so busy in the summer. There's so much going on. I almost travel less in summer now. I'm going to get out of your way because you guys are swamped. Probably somewhat less than the summer, more in the offseason.
If we ever roll out projects or initiatives or if we want to do some advanced training, all that stuff's done in the offseason now. I might be out there every other month or quarterly then we do service summits where we bring all of our leadership team together in the offseason. That's a big deal to get those guys together. That's been hurt since COVID. People can't travel as much. I do have one good story about COVID. Can I tell you?
Paul Giannamore: I’d love to hear it.
Jared Borg: I don't know which meeting I told us in but I'll tell the story now. When COVID was going on and all of a sudden, we couldn't travel, you could see that it was rough on your people. All of our CSRs are working remotely, our technicians were showing up by appointment to pick up products one at a time. We decided to travel in October of 2020. Lynn, my COO, and I decided where we were behind on hiring some field managers so we went out to Chicago. We were there and we were trying to get this done. We show up in the office and it's like a ghost town.
Usually, when we're there, we're trying to spread some cheer. We buy everybody lunch, we tell them we love them and we're like, “How do we show our love to these guys?” My COO had a great idea. He’s like, “Let's go to Target.” We filled up four shopping carts full of booze. We started showing up at their houses and we'd knock on their door. CSRs, techs, you name it, and we're like, “Here's a little treat. We love you. We're sorry that you're going through this. We appreciate you.”
What's cool is if you see their kids or their spouse, and you’re going to tell that CSR’s husband, “Your wife is so talented at what she does. We appreciate her so much.” He says, “She loves her job. She loves working there.” You go to a technician’s house, and they just bought the home. That was part of a big deal. We celebrated that in the company and you're giving a little gift.
For us, it was a cool thing because I only see my technicians or CSRs at work so that was unique. We even got invited in a couple of times. You're sitting in their living room and you’re like, “What a cool opportunity that was to go out and see these folks and let them know, ‘We love you. We realize it's hard.’” COVID brought about some things that made us adapt and get better. Lynn traveled to Virginia a few weeks later and did the same thing with one of our field managers. We had the same good experiences. It forces you to show your people that you care in other ways.
Paul Giannamore: As you grow this business under PestCo, I know the dust is still settling on this but I would imagine it's going to allow you to do less of what you either don't like or you're not good at and more of what you do like.
Jared Borg: God willing.
Paul Giannamore: That's the plan, Jay. Let’s make that happen.
Jared Borg: Since I started the business, I learned early on that I needed to grow and replace myself. If any task at my business was reliant on me doing that on a daily or weekly basis, the next in line is to hire someone to do this. I learned early on that I was not the best at most anything at that company and finding people that were better than me was not a complicated thing. I found a niche where for the most part, Lynn Peterson runs day-to-day. It allows me to execute the strategy, work on creative things on the marketing side, develop relationships with people in the industry, and do some foresight into what this looks like 2 or 3 years down the road. For the last few years, I've been doing what I like, but we needed some more resources and some capital. Some partners will help us do some of those bigger things.
Paul Giannamore: You guys are running a $20 million platform. Prior to this sale, if you could spend your time on one thing, what was it? What did you enjoy? What do you enjoy doing?
Jared Borg: I enjoy strategy and building our people up and giving them opportunities. In some of that, strategy is a weird thing. You can go and people want to outsource HR, payroll, or their SEO. It depends on the marketing but few people are outsourcing strategy. They're trying to outsource one thing. In our industry or businesses our size, what was lacking was maybe some strategy. It's been fine but that's a unique thing to come up with and say, “How do we make door-to-door, online marketing technicians and all these different pieces work together harmoniously?”
Sometimes it takes removing yourself from that and looking back. You might move one little switch here, one little knob here, and get things right and then my job is to get out of the way. That's mostly what I've done. I enjoy doing that. I like the small tweaks, tuning and empowering our people with that. I'm never going to show up in a branch and say, “You need to do your inventory this way or run your tech meetings this way.” I'm going to say, “Here's your KPIs. Here's what I expect you to hit. I want you to figure out how to do it. I'm not even going to trick you into making it think that it was your idea. I'm going to legit let you come up with it. I'm going to give you a leash long enough to not hang yourself, but to be creative and do things.”
While a lot of things are standardized across the platforms, there are some differences and we embrace that. We let them have a little bit of competitive advantage against each other to then get the other branches to say, “Why don’t you guys figure out what you're doing a little bit?” I can focus on big strategy, working behind the scenes with sharp people and I love securing talent too. I've enjoyed hiring sharp people and developing relationships with them to do their job the best they can. We have a sharp CMO who I enjoy working with. I told you that I like doing a lot of stuff.
Jay Keating: The other thing that's important and interesting and I was told this a long time ago, there's no such thing as status quo because even if you're not moving the world is. You can't stay the same and stay the same because the rest of the world around you is moving. It seems inherently the platforms we're partnering with and we're bringing into the family understand that the world is dynamic and the people are dynamic.
They're into and interested in what's going on for not only their customers, which is mission-critical. Customer experience is what it's all about. They're also interested in their internal customers, the people that they're developing that they've hired. You heard Jared say, “I love going in and hiring smart people and giving them the chance to do this.” I've had the opportunity and blessing to be able to do that a thousand times in my career in the pest control industry. What's fun about this is to find a group of people who all feel the same way. You put that together and all of a sudden, 1 + 1 + 1 equals a whole lot more than three.
Paul Giannamore: A lot of guys out there wonder why private equity has continued to move into pest control but a lot of people are like, “What is it? Is it somebody making an investment in my business? Is it a change of control?” How does all of this work? I want to talk to you two a little bit about that. Jared, you started this process and it was one in which I never thought we would be sitting here. You looked at it and said, “With where valuations are, I will explore this and I want to explore the strategic round but I also want to explore the private equity opportunities.” For years, you were talking about private equity. I remember I was having conversations about private equity.
Jared Borg: You're always interested in what that balance looks like. I don't know how in-depth you want to go into this because of its unique nature. If you think about it, if I want to sell and walk away, then I call Paul and I'm like, “Run a competitive bidding process and give me the highest bidder,” and I walk away. I know everybody says that they want to make sure that it’s with the best hands and all that stuff but, ultimately, who do they go with? The highest bidder.
Now there's, you go to private equity and say, “I want to partner.” I still have to run a competitive bidding process to establish what that market value is and then I’ve got to bring in someone that I like and want to work with. That's a lot. We can attest, and we've been through this, that it’s a lot more complicated process. That was a complicated process we went through.
Paul Giannamore: You had a full head of hair months ago.
Jared Borg: Our people have been asking me, “Explain the private equity play to me. Explain how it works.” I say, “One, what are your goals long term? That's specifically different if you want to hand the keys and walk away.” Are you interested in giving up some of your equity now? That's a big ask for some people to give up. Everybody would love to give up 15% equity for someone to come in and be like, “Here's a blank check to go do whatever you want.” Most of these folks want controlling interest and all the stuff that goes along with that. There's a real comfort level you have to build with that.
I've heard that you give this advice a lot. When people are in my position, they're trying to build their business, and they're trying to outsource some ideas or network with people that are like, “Get outside of your industry. You get that advice a lot.” TSCP has an interesting case study with Len The Plumber. They've crushed it with Len. What's interesting is we told our people in Virginia that was one of the case studies. Every single one of them we're like, “We know about Len The Plumber. They're crushing it on traditional advertising. They're crushing it online. They're buying companies.”
I hadn't seen anything like that yet in the private equity market where someone had found a service industry and was successfully consulting in one market. That Len The Plumber plumbers in that Northern Virginia, Maryland, Baltimore area are crushing it. That gave me a lot more comfort level that these guys were serious about the service industry and understood how it worked. It's somewhat route-based and things like that.
Paul Giannamore: When you look at Len The Plumber, for example, do you feel you're being pulled then into an ecosystem of other service-based businesses where you can deal with the CEO of Len The Plumber, the CMO, and all the guys that they have there and say, “What are you guys doing? Here's what we're doing,” and you go across different portfolios?
Jared Borg: I have an incredibly talented chief marketing officer and he was like, “I can't wait for someone in the Len The Plumber to tell us how they do media buys.” We've never done media buys. We've done zero branding up until now. I bought a media branding package for our company. I might have told those guys that I placed an order for that. That's something that we saw as a part of our business that was missing.
You'd agree with me that in Chicago, we have a market share. We're a big operation there. That's a place where we should be branding outside of direct contact online, whether it's billboards or radio or whatever. You need a little bit of that. To be able to tap into someone like Len The Plumber and see what they're doing is cool.
Paul Giannamore: You guys are doing zero media. It's online.
Jared Borg: We know that we’ve got this many customers last month from that exact channel and what that costs, and then we can pour more money into whichever one works the best. The questions that I get from people are, “Who are the other PE players in the party right now?” “Why them and not Certus?” “What is your plan going forward?”
I asked Danny, our VP of M&A, “What's our strategy here?” It’s joking but serious. You're opportunistic about trying to do the best you can with density plays and door to door and whatever you can. Maybe something better pops up that wasn't on your radar and you have to decide if that’s the strategic route you want to go? It's a unique thing to be able to pivot and say, “Maybe I want to go to Indianapolis or whatever.”
Paul Giannamore: I think about a firm like Thompson Street. Jared got to see a few private equity firms. I get to deal with these guys every day of the week. I don't want to throw shade on any other private equity-backed firm out there. You've got EQT that owns Anticimex. You've got Imperial Loans and Certus. We're starting to see more of that in the industry. When Jeff partnered over at Thompson Street, he first contacted me. He's like, “Paul, I'm super serious about pest.” I was like, “So is everyone else.” For the first three months, I ignored him. He kept texting me and emailing me, “I’m in. I want to get involved with processes.”
Jared Borg: Jeff’s nothing but persistent.
Jay Keating: Don't worry. You'll hear from Jeff again.
Paul Giannamore: “You're not involving us in processes.” I was like, “Okay, fine.” I started bringing them and right out of the gate, they were serious. They had done their homework and the one thing that I did like about Thompson Street was that they're not a lower-middle market firm. The new raise was a $1.3 billion so they're fine with a ton of dry powder behind them. It's not like, “We're going to buy a $20 million business, do a few add ons, maybe get it up to $40 million and figure out how we're going to flip it.” They're also long-term focused, which a lot of other private equity firms are. I appreciated the fact that Jeff wanted to get in.
In one of the first processes that we got him involved in, he was crazy aggressive. Jeff style. He’s coming in bringing the team, “We're doing this deal on buying this company.” That's it. He got serious. I said, “I want to get him involved.” They were involved in the process. We had the meeting out in Idaho. They may have been the first private equity firm that you sat down with after dealing with a bunch of different strategics. What was your impression of, “Here's private equity. This is the real deal. This is game time, Jared. This is the real meeting.” What do you think of Jeff and the team?
Jared Borg: First off, Jeff and Brandon are super sharp guys. Frankly, if you're in PE, you're a sharp guy and you figured some things out in life, but they were serious. If no one's ever been through that process, it's a little weird because I'm the one going to market and you think you're going to sit down and pitch yourself, and what you're doing is awesome. You sit down and all these guys are telling you the exact opposite. It's them saying why you should pick them.
They tell us about Len The Plumber, Method Wheels, and all these different industries they're in and how they work. I can tell quickly if I'm going to click with someone and think that I can work with them. Brandon and Jeff were two guys where I was like, “I could work with these guys.” They came in and they were super competitive. We knew they were serious. As we worked through that, it was awesome. I think highly of those guys.
Paul Giannamore: How was it? We go through this process, you and Kyle make the determination, “We're going to partner with Thompson Street.” At that point, no one's been through it. It's hard to imagine the work, the stress, and everything that goes into it. How was dealing with Thompson Street from the time we signed the LOI all the way to last week of closing?
Jared Borg: One of the things is I was having a strategy discussion with Jeff. Jeff's months into the industry and I said, “What do you think about this?” He's like, “You tell us. You've been in the industry for this long. What do you think we should do?” It was nice knowing that you had a partner who's going to empower you.
Nobody wants to find out at closing, “The adults in the room now. Kids, move along.” Even in that process, we were discussing strategy and he was empowering us and being like, “The reason we're doing a deal with you is that we should trust you to make some of these decisions and to help us guide that path and vision.” That was a good sign early on that this is a good fit for me.
Paul Giannamore: Congratulations. This is the biggest platform acquisition that PestCo has made. This is going to kick off the residential division. Jay Keating, Jared Borg, for any of our readers out there who want to track these guys down, Jared is a great guy to talk to. He's gone through this process. If you are thinking of a strategic sale, private equity, or one-off opportunities if you're in the Midwest, or in the mid-Atlantic, Jared would like to talk to you about buying your business and do some propaganda for you, too.
Jared Borg: Apparently, I'm going to learn some ground game, shake some hands, kiss some babies, and buy some tech’s dinners.
Paul Giannamore: Thanks for joining us.
Jared Borg: That's awesome.
Jay Keating: Thank you.
Pointe Pest Control
Green Pest Services
Ecoteam
Envirotrol
Thompson Street Capital Partners
LinkedIn – Jay Keating
Len The Plumber
EQT