The Right Way to Respond to an Unsolicited Offer – MoleMen Case Study

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A National Acquirer Approaches MoleMen, Inc.
Like many pest and wildlife control businesses, MoleMen, Inc., (the “Company”) a multi-generation, full-service wildlife control firm was approached by a national pest control company (“BigCo”) interested in expanding its wildlife services into MoleMen’s geography.

The Owners Weren’t Even Thinking About Selling
While the shareholders of MoleMen hadn’t considered selling their business, the call from BigCo prompted some internal dialogue. The founder, Jeff, was rapidly approaching retirement age and his son, Buck, was recently appointed president. They reasoned that an acquisition of MoleMen might be a way for Jeff to fully fund his retirement, mitigate his risk and slowly phase out of the business over time. Further, the resources of a large national firm would allow Buck and his team to grow MoleMen into a large, regional player. They responded to the acquirer that they were willing to sit down and see what BigCo had to say.

The Acquirer Wants to Know the an Asking Price
They had a great initial meeting with BigCo and felt very comfortable with the individuals they had met. After executing a confidentiality agreement, BigCo provided some references of other firms that it had acquired in the recent past as well as requested financial and operational information from the Company. The shareholders of MoleMen were told that BigCo would put a formal offer on paper.

Shortly after providing the information to BigCo, Buck received a call from BigCo’s regional manager who asked Buck how much they wanted for the Company.

That’s when Buck called Potomac.

On our first conversation with Buck, he said: “This is the most important financial transaction of my life and I am going to make sure that I don’t make an amateur mistake – you only get one chance to sell your business. I called BigCo’s references and asked the other sellers how they knew if they were getting a great price. None of them had any idea and none of them even negotiated with BigCo. Quite frankly, I was shocked. That’s when I decided I needed to engage a real expert.”

The Company Engages Potomac as Its Sell-Side Advisor
MoleMen engaged Potomac to negotiate with BigCo and within a few days we performed a preliminary valuation on MoleMen and determined strategic alternatives for the Company. Sarah Sullivan, Potomac’s Director of Corporate Development said, “Whenever you have one buyer, you have no buyer. When you’re approached by a strategic, doesn’t matter if it’s Rentokil, Terminix, Orkin, or the firm down the street, the first thing you do is drum up competition to give yourself leverage… and that’s exactly what Paul did.”

Before BigCo had an opportunity to put an offer on the table, we got them in front of another acquirer: Terminix. We knew that Terminix was about to get very aggressive in the wildlife control space and was looking for managerial talent. Paul Giannamore commented, “I’ve seen a lot of wildlife firms over the years, but this one was different. The most important acquisitions involve the purchase of serious resources and capabilities as opposed to simply buying accounts. Jeff Hempel, the founder, is a technical master and Buck Hempel, his son and President of MoleMen has the raw intelligence, personality and skills to run a $300 million national, wildlife program. So, I called Terminix and said if you want to be serious players in the wildlife space, fly Buck and Jeff down to Memphis immediately before this business goes to a competitor.”

MoleMen Goes to Meet with Senior Management
According to Buck, “Paul Giannamore, the head of Potomac’s Pest Control Group, had a lot of friends in high places. Within 72 hours of Paul discussing the opportunity with us, Terminix had flights to Memphis booked for my father and I and a car waiting for us at the airport…. and we had never even spoken to anyone at Terminix at this point.

We spent the day in Memphis meeting with the President, CFO and other senior executives of Terminix. I won’t go into the details of the strategy and discussion, but let’s just say I was so excited at the opportunity that I couldn’t sleep that night.”

The transaction closed a little over a month later. Buck was brought on to the Terminix management team, his employees were smoothly transitioned into Terminix’s field service operation, and his father Jeff came on as supervisor and technical advisor who will slowly transition out over the next few years.

Engaging Potomac was the Best Money I Have Ever Spent
We caught up with Buck last week, a few months after the closing and he said: “This acquisition has provided me, my employees and my family with a tremendous amount of upside. Now that the transaction is over I see the immense amount of skill and expertise it takes to negotiate and close one of these deals. There is absolutely no way I would be in this position right now if it weren’t for Paul and his team at Potomac. If it weren’t for Potomac, we would have taken that first offer from the other acquirer. When they finally got the offer on paper, while it was good, it was in no way comparable to what Paul was able to accomplish for us with Terminix.

Paul was everything one could want in a seller’s advisor. His knowledge, expertise, aggressive approach, and follow-through were top notch and he guided me through every step of selling our business. Bottom line, the money spent on The Potomac Company’s service was the best money I have ever spent.”

Paul Giannamore was extremely happy with the outcome of the transaction and said, “There is no doubt in my mind that if Terminix puts the appropriate resources behind Buck Hempel and his team, they will be the largest, most profitable wildlife management firm in North America. Clearly, one of the most important aspects of a strategic acquisition is acquiring resources and capabilities. The MoleMen team truly is world-class and Buck Hempel is the whole package: he’s super sharp, extremely professional and poised to be the national leader – both technically and managerially – as wildlife management goes national. I am very proud to have been the architect of this transaction and wish the Hempel family, the MoleMen team and Terminix the very best as they grow this platform together.”

Don’t Go it Alone
If you’ve been approached by an acquirer, don’t go it alone. Most owners of pest management firms and wildlife control businesses leave money on the table when they sell. Buck realized that when he called BigCo’s references. Unlike those he called, Buck knows not to represent himself in the most important transaction of his life, as he likes to say: “Surrounding yourself with people who are more knowledgeable and skilled than you are in their given field is how a man stays ahead in business.”

Give us a call today at +1–215–525–0689 or fill out the contact form below if you are planning your exit from your business or have been contacted by an acquirer.

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