Andrew Usher, Director of Catand Advisory, offers some helpful advice to any pest managers that might be considering selling their business.
Besides helping pest managers sell their businesses in Australia and beyond, I am also an investor/owner in a pest control business in Sydney and the Central Coast. Like many pest business owners, I have been approached by some of the major pest control players in Australia to sell our business. The question is, if I wanted to sell my business, who would be best placed to buy it?
Let’s take a look at the options. The first would be to sell it to one of the three major pest control players that are actively looking for businesses to acquire: Flick Anticimex, Rentokil and Orkin Australia. The second option is to sell to a private equity company looking to expand its portfolio. The third option would be to sell to a medium-sized business looking to expand its operations. While option two and three are possibilities, selling to one of the big players is a more likely scenario.
So, would one of the major pest control players be interested in acquiring your business? Let’s think about what they are looking for in an acquisition. Firstly, your revenue per year needs to be healthy. Secondly, there needs to be a clear opportunity for growing the business further – this would usually build on the reputation you’ve worked hard to establish. Thirdly, geography comes into play, with the population density of the location being a consideration. Lastly, it comes down to how much the acquirer needs or wants your business, and how it fits in with their strategic direction.
To get some insight, we can look at who has (or hasn’t) been buying pest control businesses in Australia recently by doing a search on abr.business.gov.au.
Flick Anticimex
Flick Anticimex took on 23 business names in 2023 (2022 = 45) and so far in 2024 we know that they have recently acquired Exopest in Melbourne, but it appears not many more. Referring to business names is not a 1-to-1 relationship of businesses bought but is indicative of how active Flick have been over the years in terms of their M&A activity. Having that much M&A activity over such a short time does mean that somewhere along the line they will need to take stock and ensure the businesses have settled in successfully and develop the next step of their M&A strategy.
It could be that they would focus on larger businesses now as typically a larger business (say over $1m in revenue) is more stable and not necessarily focused around the business owner and their relationships with the clients. These businesses can be run on their own within the broader organisation and be given a longer timeframe to integrate them. Or perhaps Flick have critical mass (i.e. enough staff and revenue) in their local markets now, so that they can be selective in terms of who they would like to engage. At this stage, I would consider that Flick is being more strategic on who they acquire and why.
Rentokil
Rentokil, as you may know, have managed to secure some solid businesses of late including Allstate Pest Control in South Australia, Suburban Pest Management in Queensland and WR Gay Pest in Victoria. If we take note of the business names they have taken on it reads as follows: 2024 = 3 (not including Allstate, Suburban etc); 2023 = 7; 2022 = 3 which is vastly different to Flick yet likely developed with a different strategy in mind. Looking through these business names, it would also appear that their strategy includes acquiring Hygiene or Indoor Plant businesses, so their scope in terms of service function would be broader than that of just pest control. Based on this we can assume Rentokil would be willing to look at most businesses, and could mean that the seller’s workforce or service technicians on the ground are a major factor in who they enter into discussions with.
Orkin Australia
Orkin Australia would be the third largest pest control organisation in the country and also one of the main organisations acquiring pest control businesses. We know they have taken major steps within the local Australian market, with acquisitions such as Adams Pest in Victoria, Statewide Pest and even Scientific Pest plus others, but looking at business names taken on over the recent years outside of the major acquisitions they have made, it looks like this: 2024 = 0; 2023 = 2; 2022 = 5. Is their strategy one focused on sizeable businesses in specific markets? It seems to work for them as does their strategy of running their businesses under the original owner’s brand (a strategy now being copied by Flick and Rentokil – at least for the short to medium term).
When it comes to selling a business to one of the big three players, timing is everything. Perhaps the timing is just right for your business and it fits into their scope at that particular time. What next? This is when it pays to seek professional advice. Without professional advice you may walk away from a potential sale leaving a lot of money on the table without even knowing it. From what I have heard this has happened to some pest managers already!
Getting the Right Deal
Engaging with a professional in selling your business gives peace of mind that your business is being fairly valued. Additionally, professionals such as myself will be with you throughout the entire process from presenting your business in the correct manner, understanding any offers, negotiating the finer points, co-ordinating meetings and assisting with the preparation and process of due diligence. This extends all the way to the contract of sale review and in my particular instance, I remain available for a further 12 months for progress updates and to tackle any minor challenges along the way (unlike your standard business broker).
For any pest managers thinking about selling their business, I would suggest engaging a professional like myself, having a coffee with them and evaluating the key players in the market. Use the discussion to help you decide what you want for your business, your staff and your customers and then use their professional network and negotiation skills to find the perfect partner – one that will give you all you’re looking for (plus the $$$).
Andrew Usher, Director, Catand Advisory
