Guide To Buying A Pest Control Company

Pest_Control_TechWhether you’re looking to buy a one man pest control operation, or a multi-million dollar pest control company, the process of buying a company can be overwhelming and challenging. It takes some serious planning and consideration. Any lapse in the course of action can cost you thousands of dollars or more. You definitely want to make sure you do it right the first time.

Here is an introductory guide for anyone out there who is thinking about buying a pest control company:

Places to Buy & Sell A Pest Control Company 

The first step in buying a pest control company is to find a company you may be interested in acquiring. I asked a few online pest control communities where they have seen businesses for sale. Here are a few responses I got; places to look that will get you started:

Broker: Many pest control operators turn to a broker when it’s time to buy or sell. A broker is there to guide and educate both parties through the process, for a fee of course. Expect to pay top dollar when buying through a broker, as they’ll do their due diligence to get the highest possible price for their client.

Trade Magazines: Pest control magazines, like PCT magazine, have listings for pest control companies for sale.

Craigslist: Many smaller or family owned pest control companies turn to Craigslist when trying to sell. Search “pest control” under “For Sale By Owner” in the geographical areas your looking to service.

Check With Suppliers: If you are already an existing pest control operator, and looking to grow by acquiring another pest control company, check with your chemical and equipment suppliers. They typically have their ear on the industry and may know of someone who is looking to sell; possibly one of their own clients.

Pest Control Specific Online Classifieds: There are a few pest control specific online classifieds out there; pestweb.com and pestcontrolbiz.com to name a couple. Some out there may act as a broker for a seller.

If you are a pest control operator who is looking to sell your company, please comment below. 

What To Consider Before Buying 

Financial report and penThe first step in the buying process is determining if the company you’re interested in buying is a good fit for you, and sets you up for the highest probability for success in the industry.

The first key is determining the value drivers of the potential company you’re thinking of purchasing; and it’s more than just earning potential. Here are a few things to consider before you buy:

Types of Pest Control Services 

What kind of pest management professional do you want to be? Whether it’s generic pest control, termite control, rodent control, bird control, bee removal or relocation, or even weed control; most extermination companies have a distinctive service mix. Each service may require a specific set of licenses. Do you want to service commercially or residentially?

Generally speaking, you’ll want to purchase a company that has a product or service line that will differentiate you from the rest of your competitors in the industry… A company that has a built in niche.

Reputation Of Company 

You can get a very good feel for a company, by what their customers think of them; after all, customers are the life-bread of a pest control company. Check out online reviews and see what people are saying about the company you’re thinking about buying.

Customer Base 

When purchasing a pest control company, one of the biggest aspects to consider is what kind of established customer base you’re getting with your purchase; and keep in mind there will be some attrition during the transition period. You will be essentially buying customers along with inventory and human capital.

Figure out how many services you’ll need each quarter to break even, and then how many you need to be profitable. Is this number above or below the number of customers you have to service? Additionally, you’ll want to pay close attention to customer retention rates. Does this potential company have high turnover in it’s customer base, or is more secure and established. Generally speaking, a retention rate over 70% is a good number.

Existing Cash Flow 

Before making any purchase, you’ll obviously want to examine the financial records of the company. Like previously mentioned, you’ll need sufficient cash flow to pay overhead and make a living. How strong is the company’s current revenues? Take a close look at monthly or quarterly revenues, and make sure there is a consistent level of revenue being generated. You don’t want to see these numbers all over the board. I’d advise having a second party, like an accountant; take a closer look at the finical records before signing on the dotted line.

Price Point 

What are your margins? Take a good look at just how competitive your prices are in the industry. Is your product and service being sold at a premium price point offering fewer services, or are you going to be a volume provider? How much room do you have, if any, to adjust your prices either lower or higher to be competitive?

Closeup image of Vision flow chart on a blackboardLocation & Competition 

This day and age, it’s nearly impossible to find a location or market in the pest control industry that doesn’t have a lot of competition. Just how much competition you’ll have is the key. Determine your breadth of reach in a given location, and how much opportunity there is for growth. What and where is your niche going to be?

Human Capital 

When buying a pest control company, you’re also purchasing the employees, or human capital, that comes along with it (in most cases). Examine just how much experience these employees have, from technician to administrative assistant. Are all the right people in the right locations?

Look at the turnover rate of employees and gage the commitment level of the current employees. If you have to hire a lot of new employees to run your newly purchased business, that could be a cost burden as well. Training, licensing and certification can be an expensive endeavor.

Areas To Grow And Improve 

Lastly, take a close look at areas you can grow and improve the business. Typically, you’ll notice a few things right off the bat; other noticeable improvements may take some more research. If you’re not seeing a lot of these needed improvements, there may not be much room to grow your business once you take over.

Closing The Deal 

Choose your own way, conceptAfter you have thoroughly done your due diligence on a company, and feel like purchasing it will be a good fit for you and your business aspirations, it’s time to go ahead with the purchase. First, you will have to agree on a fair purchase price. Their may not be much wiggle room in this area, but I would strongly recommend hiring an experienced appraiser.

Next, you need to agree on exactly which assets you’ll be buying in the purchase. Most purchases of a pest control company will include: existing customers, equipment, a fleet of vehicles, human capital, building(s), and possible franchise fee. Most often, businesses are purchased on an installment plan, with a substantial down payment.

After you have outlined the terms on which you and the seller agree, you’ll need to create a written sales agreement and have a lawyer review it before you sign on the dotted line.

Owning Your Own Pest Control Business 

There is a lot of stress and a lot of joy that comes along with following your passion and owning your own pest control business. You feel pride in owning and building something. You are challenged every day.

With this venture, many challenges can arise. Do your due diligence before hand to minimize as many challenges as you can.

If you have bought a pest control business in the past, we’d love to hear your story.

If you are a pest control operator who is looking to sell your company, please comment below.

 

About

Anthony Ball is a Content Marketing Manager with Bulwark Exterminating, an industry leader in providing high quality pest control service. Bulwark is fully operational in nine states, including thirteen major cities. While Bulwark provides pest extermination for common pests like ants, roaches, crickets and spiders; the company's differentiating aspect is great personalized service. Bulwark uses the finest and most effective products in the world to solve common pest problems.

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One thought on “Guide To Buying A Pest Control Company

  1. I did not realize that the reputation of a company was so important when it came to selecting a pest control service. It is good to know that checking online reviews can be helpful. I have also heard that word of mouth can be a good method of finding a local pest control company who can offer needed services.

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