Is Rollins for Sale?

I wasn’t going to comment on the latest Rollins rumors, but given that I’ve received scores of calls from clients, institutional investors, hedge funds, industry magazines and the financial press, I guess it’s time for me to say something. 

Last week, Bloomberg published a brief article, the relevant snippet is below:

(Bloomberg) — Rollins Inc., a pest-control services provider, is exploring strategic options including a potential sale, according to people familiar with the matter. The Atlanta-based company is working with financial advisers, said the people, who asked to not be identified because the matter isn’t public. The company has not yet launched a formal auction and Rollins could opt to remain independent, they said.

A representative for Rollins didn’t immediately respond to calls seeking comment.

In my experience, Bloomberg is not typically wrong. I think that ROL likely engaged Goldman Sachs. However, we should all keep in mind that most publicly-traded businesses engage investment banks, and most investment banking engagements are not M&A related. 

Given that the Rollins family — through individual holdings and the holdings of the family trust owns more than half of the Company — the most likely reason for Rollins to engage financial advisors is for family estate planning purposes. 

Gary Rollins (CEO) is in his 70s, and Randall Rollins (Chairman) is pushing 90. Further, the family just settled the lawsuit related to the family trust last fall, where over $2 billion in Rollins equity was in question. If there were ever a time to seek outside advice and move shares around, it would be now.

Of all of the different “options” that Rollins might be thinking through right now, there is one, and only one option that would absolutely require the company to engage a financial advisor and that is a block sale. 

If, say, the family trust wanted to sell $2 billion in Rollins stock, it couldn’t just open up an Ameritrade account and sell that stock. The sale of that stock would be an off-market transaction (known as a block sale) whereby an investment bank sells a block of stock (a minority interest) in Rollins to a buyer (perhaps a large asset management firm, or a sovereign wealth fund). 

A block sale is a privately-negotiated sale of public equities, off exchange. Such sales typically have little, if any, impact on the stock price of the company in question. The Rollins family would need a financial advisor to execute this sale for them.

If there is any fire to this smoke, this is what I think is going on. 

I don’t see any industry or financial buyers attempting to acquire Rollins at what they would have to pay in order to get the deal done.

Could the Rollins family have tired of their business being a publicly-traded company and want to take it private? Sure, that’s a possibility. But the most likely explanation here, and the simplest one is the family has privately engaged financial advisors to execute on their estate planning goals.

I don’t think that there is a whole lot to follow here with regard to the story. Just like Rollins corporate headquarters, it’s pretty boring.

We briefly discuss the situation here:

Right before the story broke, Jamie Clement and I did an interview where we discuss these and other topics. You can listen to that here or download it on Apple Podcast:

Q2 Commercial Pest Revenue Estimates Likely to be Cut by ~25% by Wall Street; ServiceMaster’s Black Wednesday – Pest Control Daily Market Update

Given the movement in the markets and the constant requests that we are receiving, Potomac will be providing a brief daily update for the time being on the pest control public and private market news.

1. Wall Street to Cut Commercial Pest Control Estimates Significantly

After speaking with several prominent wall street analysts, we expect to see some serious cuts in commercial revenue estimates for firms like Rollins and ServiceMaster. I wouldn’t be surprised if we see Q2 2020 commercial revenue estimates down by a full 25%, maybe more.

[Read more…]

Pest Control Daily Market Update 3/17/2020 – Pest Control Deals on Hold

Pest Control Daily Market Update 3/16/2020 – COVID-19

Pest Control M&A Weekly Commentary – Jan 28, 2020 — The Beginning of the End? Pest Control Transaction Multiples Contract for the First Time in a Decade as ServiceMaster Hits the Skids

Download a Reader Friendly PDF Here

This story begins on the morning of October 22, 2019. My flight had just taken off and I nestled into my seat to try to get some work done. An email from Jamie Clement at Buckingham Research catches my eye; the subject line is: SERV: TIMBER!!!!!!!!!!! 

There is nothing in the body of the email. Damnit Jamie, what’s going on? 

Oh no… ServiceMaster pre-released, this isn’t good.

[Read more…]

Pest Control M&A Weekly Commentary – January 21, 2019 – AX Buys Innovative, 2019 Outlook, Q&A, New Structure

A New Format for the Weekly Commentary

While I was back in the US in December, I had a dinner meeting with a client who said, “I would like to open this meeting with some criticism. I never miss an issue of your Weekly Commentary, but recently you’ve gone off the rails with your economic analysis. While I might not be the smartest guy in the industry, I consider myself smarter than most, and I wasn’t really sure what the hell you were talking about last month (in reference to this: Weekly Commentary November 5). Do you really think people in the pest control industry want to read about economics?” He might have a point, people in the United States Congress certainly don’t. Case-in-point, I just heard Congresswoman Alexandra Ocasio-Cortez on the news saying that the reason why the unemployment rate is so low is because people have two jobs, and they are counted twice.

[Read more…]

Pest Control M&A Weekly Commentary – December 10, 2018 – Parasitec in Paris, Rentokil Acquires Vermont Pest Control, ServiceMaster Acquires Assured Environments

Potomac at Parasitec Pest Control Conference in Paris // Copyright The Potomac Company, LLC

10 December 2018
Paris, France ==> New York City

This week’s Commentary is going to be very short. I am back in the US and this is the busiest Q4 on record in the industry, so I don’t have much time to write. However, I received over 400 emails on my last two Commentaries with some great questions that I’ll be answering publicly next week (no, not all 400 of them).

I’m writing this on my way out of Paris, where I attended Parasitec, the Pestworld of Europe. For those of you who haven’t been, it’s similar to Pestworld except: (a) the attendees dress nicer, (b) they drink less, (c) there are no 58-year-old chemical reps making out with 30-year-old manufacturer’s reps at the Dolphin bar, and (d) the exhibition hall actually keeps normal hours. Other than that, it’s about the same.  [Read more…]

Pest Control M&A Weekly Commentary – November 5, 2018 – I’m Calling a Top, American Pest / Anticimex Acquires Triple S Services, Valuation Multiples Peak

7 November 2018
Stockholm, Sweden

Well, this is going to be a long one. 

I intended to write a short post-Pestworld piece, but I just had so much great material from Pestworld and the subsequent two weeks of meetings that this post has really taken on a life of its own.

I had meetings in Stockholm this week and now I am on the flight back to Switzerland — which is going to act as my tomato timer on writing this article. So, I apologize in advance if this one gets a little messy.

I am going to make a risky move and officially call a top in the pest control M&A market for this cycle. In doing so, I am going to attempt to provide you more fact than opinion and you can come up with your own conclusions. If I’m wrong, at some point, this will provide some great fodder for the glorified real estate agents out there.

But as usual, before we get to the juicy stuff, we’ve got some transactions to announce.  [Read more…]

Pest Control M&A Weekly Commentary – October 1, 2018 – All Eyes on Rollins: The ROL Complex and Asset Prices in the Pest Control Industry

Consultants and business advisors love to use witless cliches and platitudes. Not only that, when they utter this crapola, they say it as if it’s deep insight or profound, original thought.

I know this because I, like you, am forced to attend stupid seminars and conferences in order to rack up professional continuing education credits.

PestWorld is coming up in less than a month. If you want to hear some nonsense, just show up and listen in on some of the mind-numbing BS seeping through the hallowed halls of PestWorld business educational sessions. You’re guaranteed to hear some pencil neck, standing in front of a circa 1991 powerpoint presentation, spouting such drivel as, “If you don’t measure it, you can’t manage it.” 

Or better yet, you’ll hear something like, “Run your business every day like you have to sell it tomorrow”… or is it, “run your business like you’ll never sell it?” Who knows. I guess it depends on who’s talking. Of course, after delivering that line of cheese, the speaker will pause for a second, scan the crowd with that little smirk on his face. In his mind, he’s serving up a platter of profound business wisdom akin to delivering a modern-day version of the Sermon on the Mount. [Read more…]

Pest Control M&A Weekly Commentary – September 17, 2018 – M&A Season Has Begun and It’s Gonna Be a Hot One

Pest Control Meetings at Dusk in Singapore

In my last Weekly Commentary I said that I would be trying hard to write on a weekly basis… and then I disappeared for five weeks (my lame excuses to follow). I guess even I dramatically underestimated how busy it was going to be this M&A season.

Labor day (early September) officially marks the start of pest control M&A season in North America and it’s begun as the busiest one I’ve seen in my 15 years in the industry. Transaction multiples have continued to edge higher. Every time I think we hit a top…. well, we don’t.

Right out of the gate, three PCT Top 100 companies are already under LOI and this morning we closed a transaction with ServiceMaster that would have been in the 80’s on the PCT Top 100 had the company reported. That transaction will be announced next week and with it comes with some interesting learning opportunities for all of us, which I’ll discuss next week.

On Monday, we advised on the sale of Guaranty Pest Elimination to Modern Pest Services, which is Anticimex’s largest acquisition in New England since the acquisition of Modern. The target operates in four states and will help Modern accelerate growth in New England, more on that below.  [Read more…]