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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…]

Filed Under: Blog, News, Transactions & Engagements Tagged With: , ,

Paul Giannamore to Present at PCT Mergers & Acquisitions Conference 2015

April 12, 2015 By

PCT Potomac Pest Control Mergers & Acquisitions

Potomac Managing Director, Paul Giannamore, will present again at this year’s PCT Magazine Virtual Mergers & Acquisitions Conference on August 19, 2015.

Designing the Deal: An Insider’s Guide

Holdbacks, earnouts, escrows, thresholds and baskets are just a few of the terms that you’ll hear at the bargaining table structuring the purchase or sale of a pest control business. What many business owners learn – only after it’s too late – is that the structure of an M&A transaction is just as important as the price. In this new, hard-hitting session, the Managing Director of the Potomac Pest Control Group and a veteran of the M&A market will reveal sophisticated strategies and tactics employed by seasoned deal professionals to mitigate risk and maximize gain on the purchase or sale of a pest control business. As a seller, are you worried about the dreaded holdback? Giannamore will tell you how you can fight back. As a buyer, do you want to acquire a competitor using the seller’s money to do the deal? You’ll learn innovative deal structuring as a tool to stretch your acquisition capital. In this session, PCT magazine brings you direct access to a global M&A expert that some of the largest companies in the industry engage to value and structure complex M&A transactions. [Read more…]

Filed Under: Blog, News Tagged With:

Rentokil Pest Control Acquisitions – 2014 M&A Review and Looking Ahead in 2015

March 4, 2015 By

Over the last few years Rentokil has been aggressive in acquiring pest control businesses around the globe. The focus has been to pursue platform and entry acquisitions in high-growth and emerging market economies as well as to add route density and additional capabilities in Rentokil’s existing operations.

In 2014, Rentokil acquired 30 businesses in the UK, US, Spain, Ireland, Italy, Netherlands, India, Brunei, Singapore, Sweden, Brazil, Lithuania and Korea and entered new markets in Chile, Bahamas, Mozambique and Colombia “to exploit under-served and increasingly affluent markets. Combined annual revenues of the above prior to acquisition were approximately £66m.”

Rentokil Pest Control Acquisitions 2014 - M&A Review [Read more…]

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Action Pest Closes & Four M&A Mistakes

February 5, 2015 By

We’re smack dab in the middle of pest control M&A season in the northern hemisphere and transaction multiples continue to creep up.

This morning I chatted with a client who sold his pest control business last year. He said, “Us guys who sold last year are the biggest losers of the bunch. If only I had waited another year…” [Read more…]

Filed Under: Blog

Four Pest Control M&A Mistakes

February 5, 2015 By

Mergers and acquisitions are challenging transactions for the parties sitting on both sides of the table. If you’re selling your business, even a small mistake can cause you to leave money on the table. If you’re buying, you can end up paying far too much if you “don’t know what you don’t know” about the business. [Read more…]

Filed Under: Blog

Scotts Closes $22.7M Acquisition of Action Pest Control

January 29, 2015 By

Scotts Acquires Action Pest Enters Pest Control Industry

In early January 2015, the Scotts LawnService closed the acquisition of Action Pest Control.

On October 16, 2014, Potomac’s client, Scotts LawnService entered into a definitive agreement to acquire the assets of Action Pest Control, Inc., a residential and commercial pest control provider in the Midwest for $22.7 million. The initial purchase price accounting for the Action Pest acquisition will be determined during the first quarter of fiscal 2015.

[Read more…]

Filed Under: Blog, Transactions & Engagements Tagged With: , , ,
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