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

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…]

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

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…]

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

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…]

Have Pest Control Acquisition Multiples Hit Their Zenith? Valuations Up Almost 150% in a Decade

Picture this for second.

We just jumped into a time machine and went back in time exactly 10 years — it’s now September 15, 2003. We landed at a closing table whereupon an owner was about to sell his pest control business for exactly $10 million. We quickly grabbed the seller and all of the documents from the table (financial statements, operational information, etc.) and brought them back with us into the future, to a closing table, on September 15, 2013. All else being equal, that seller would be receiving a wire transfer for $14.6 million, instead of $10 million. [Read more…]

Pest Control Company Valuation and M&A 101 – WEBINAR REPLAY

Valuing a pest control business for internal or external sale.  In this webinar, Pest Control Valuation and M&A 101: The Fundamentals, we cover the following:

  • Every pest control business has a range of values simultaneously

Fair Market Value is what the business is worth to you (the current shareholders) while Investment Value is what the business is worth to one unique acquirer.  If you don’t understand the difference between the two it can be a very costly mistake. [Read more…]

Potomac Introduces The Potomac Pest Control Executive

Since 2007 Potomac has published cutting edge research and commentary on value creation, M&A and strategy in the pest control industry.  In September 2013, The Potomac Pest Control Group has renamed its industry leading publication The Potomac Pest Control Executive (“PPCE”). [Read more…]

Why My Father Chose Orkin…

Orkin-Logo-on-whtDownload PDF of this Article


Today’s edition of The Potomac Pest Control Executive is a personal story. It recounts the experience my father and I had as we shopped for termite and pest control services for his home.

As executives and owners, it’s often very difficult to view our sales and marketing process through the eyes of an uninformed prospect.  [Read more…]

Personal Goodwill Hunting – Bifurcating Personal & Corporate Goodwill in the Pest Control Industry

1. Introduction

An overview of the tax ramifications of the sale of a C corporation’s assets and how the sale of personal goodwill as an asset class can offer a seller substantial tax savings

Over the next few years, a considerable number of pest control operators will exit their businesses and retire.  Many long-established pest control companies are organized as C corporations, which creates serious tax issues for both buyers and sellers.  If you own a pest control company organized as a C corporation (or an S corporation subject to built-in gains)[1], you are likely staring down the barrel of a nasty tax cannon that can eat up more than 50% of the sale proceeds due to oppressive double taxation.  [Read more…]

Buyer and Seller Beware: The Assignability of Contracts in the Context of M&A

It’s the morning of closing and excitement is in the air.  You are a few hours away from acquiring your first pest control company which will add a nice chunk of sales and technical expertise to your current operations.  So far, you’ve done everything by the book.  You and your advisors have negotiated a fantastic price for the target, you’ve completed extensive due diligence and your attorney has advised that all you need to do now is show up at the closing, sign a few documents and fund the deal. [Read more…]