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Pest Control M&A Weekly Commentary – July 30, 2018 – Where to Stash Your Cash When You Sell

August 1, 2018 By

 

In this week’s commentary, we’ll be exploring:

  • Driving Value: The Importance of Route Density
  • Potomac Announces the Sale of Banks Pest Control to Rollins, Inc.
  • Where to Stash Your Cash When You Sell (or Even if you Don’t Sell)
  • Meetings in Singapore & Malaysia
  • Western Governments are Totally and Completely Broke … and They Want Your Money
  • A Highly Recommended Deal Attorney

Driving Value: The Importance of Route Density

Two of the most powerful levers you have to drive profitability in your business, and therefore value, is pricing and route density. We’ll save pricing for another day.

Where I see more than half of pest control companies not really thinking through things is on the density side. Sure, it feels good to cover an entire region. “I service from NYC to Baltimore, I’m YUUUGGGEEE!” 
[Read more…]

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Pest Control M&A Weekly Commentary – July 16, 2018 – Outlook for the 2nd Half of 2018

July 18, 2018 By

In this week’s commentary, we’ll be discussing:

  • What’s in Store for the 2nd Half the of Year
  • Rentokil North America Acquires Innovative Pest Management
  • Pest Control in the Emerging Markets
  • A Little More on Knocking Doors

(Grand Kempinski Hotel, Cairo, Egypt)

So I’ve been a little slow in publishing the weekly commentary lately… it’s been very busy out there. As you’re about to see over the course of the next six months, the PCT Top 100 is about to be rearranged … again.

This week’s commentary is going to be a little short and we’ll get back to normal next week.

Although I am going to touch on my recent trip to the emerging markets of the Middle East and North Africa — namely, Egypt, Saudi Arabia and Turkey — first I want to get into my thoughts on the second half of the year… [Read more…]

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Pest Control Private Equity and Search Funds, A Public Service Announcement

May 23, 2018 By

This is a friendly message to those in the private equity and search fund space, in hopes to save you (and us) a lot of time.

The pest control industry is a great business and I am very happy that you have interest in it.

We are contacted on a daily basis by private equity firms and search funds looking to get into the pest control industry. On very rare occasions (perhaps once per year), we include non-strategic acquirers in process. In the current environment (May 2018), it is almost impossible for financial buyers to compete with strategics. [Read more…]

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Should You Knock Doors? The Economics of Pest Control Door-to-Door Sales

May 21, 2018 By

Illustration Credit: PCT Magazine, Feb 2016

Since PCT Magazine printed its February 2016 cover story, “Who’s Knocking at Your Door?” [Download it here: PCT Whos Knocking at Your Door], I’ve received a litany of questions on door-to-door sales. This article was printed on the heels of the ServiceMaster acquisition of Alterra, which, at the time, was the largest door-to-door (“D2D”) pest control company on the globe, having gone from $0 to $75 million in the three years prior to the acquisition.

In 2017, we estimate that approximately $150 million in pest control revenue was sold on the doors in North America.

I find that most of you fall into two broad camps when it comes to door-to-door sales: [Read more…]

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Potomac Announces 6 Transactions: Singapore, Anticimex, Canada, and Brad Harbison of PCT Magazine and No Severed Horse Head

August 3, 2016 By

As we slowly begin to move into pest control M&A season, we’re pleased to announce six transactions:

Brad Harbison’s (Managing Editor, PCT Magazine) Pest Control Business was Acquired by (…wait for it…) in a Competitive, Strategic Sale Process

What pest control company ensures that the home of industry glitterati and managing editor of PCT Magazine remains pest-free? [Read more…]

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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

June 16, 2016 By

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…]

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

June 1, 2016 By

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…]

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Forbes Magazine on Pest Control M&A

May 11, 2016 By

Alterra Forbes Potomac

In the May 31, 2016 print edition of Forbes, the magazine discussed the recent acquisition of our client Alterra by Terminix as well asPotomac Company Forbes Magazine transaction multiples in the industry. Karsten Strauss, in his Forbes article said:

“After three and a half years in operation Alterra shot to $75 million in revenue–at just the right time. In recent years consolidation in the$7.8 billion U.S. pest-control industry has been pushing valuations as high as 2.5 times revenue, twice the usual multiple. That’s been fueled partly by a string of U.S. acquisitions by Rentokil, a U.K. company. Last year Royce hired Paul Giannamore, a pest-industry specialist with the Potomac Co., a boutique investment bank, to negotiate a sale to Terminix, this one for an estimated $135 million. “He couldn’t have timed the market better if he’d tried,” Giannamore says.” [Read more…]

Filed Under: Blog, Transactions & Engagements

What You Don’t Know Could Cost You — Paul Giannamore and Patrick Baldwin on the Arthropodcast

April 22, 2016 By

Special thanks to Patrick Baldwin and the Arthropodcast crew for having our very own Paul Giannamore on the podcast.

Here is a link to the show and a description below:

https://itunes.apple.com/us/podcast/what-you-dont-know-could-cost/id955333019?i=366083116&mt=2

What You Don’t Know Could Cost You

Welcome to a very special edition of the Arthropodcast, this episode we have Patrick Baldwin of Pest Works speaking with valuation guru, merger and acquisition expert…. the one and only Paul Giannamore of the Potomac Company. If you own a pest control business, consider starting one or have thought about acquiring a competitor, you do NOT want to miss this hour long interview. Paul and Patrick talk about things you can do to boost the value of your company, common misconceptions, important things business owners often overlook, along with tons of information you can’t afford to be without. Listen close, cause this one’s a doozy.

Filed Under: Blog

Pest Control Transaction Multiples Peak as Rentokil Initial Acquires The Steritech Group for $425 Million

September 1, 2015 By

Rentokil Acquires SteritechSteritech Acquired by Rentokil

As many of you have heard me say in a variety of industry speaking engagements over the last two months, valuations in the pest control market have peaked and will likely remain elevated for the next six months or so (we’ll be publishing a report on that next week and you can get it here when it comes out).

Rentokil’s acquisition of Steritech for $425 million (2.8x revenue / 28x EBITA) in cash likely represents the high water mark in terms of valuation and pricing.

John Whitley, founder of Steritech, has come full circle as he used to run Rentokil North America decades ago before founding Steritech. It’s awesome to be able to sell your business to your former employer for $425 million in cash and I salute John for building a phenomenal company — and after running it for decades — to exit at the exact right moment.

If he would have sold this business two years ago, he would have been lucky to get $250 million for it — what a huge difference two years makes. [Read more…]

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