Home Team Enters a New Era
1 May, 2008 By: Jerry Mix Pest Management ProfessionalIn early April, Rollins Inc., the parent company of Orkin Pest Control, acquired HomeTeam Pest Defense from Centex Corp. for a cash payment of approximately $137 million. This transaction is no small deal:
- HomeTeam Pest Defense is the third-largest residential pest management company in the industry, with 50 branch locations in 13 states. The company performs pest management services for approximately 400,000 customers.
- Rollins, on the other hand, has about 1.7 million pest management customers and more than 400 locations in the U.S., Canada, Mexico, Central America, the Caribbean, the Middle East and Asia.
Rollins announced it will be operating HomeTeam Pest Defense as a wholly owned subsidiary. Rollins already has a track record in this regard, as it runs Canada's PCO Services, Western Pest Services and The Industrial Fumigant Co. in the same manner.
"We had doubled our business every five years, but with the slowing of the home-building business, we were not installing as many Taexx built-in pest control systems," explains Bob Wanzer, president and CEO of HomeTeam, noting that his Dallas-based firm was growing at about $20 million a year. Because of that growth, he adds, HomeTeam was creating "tremendous value" for Centex, which, valued at about $10 billion, is one of the largest home construction companies in the country.
 Bob Wanzer on.... |
"As our number of Taexx installations slowed, which is reflective of the home-building market, our revenues also slowed," Wanzer continues. "We were still growing, but now it was high single-digit growth. This was a great opportunity for Centex to cash in. Right now, it's all about cash flow for construction companies. That's what Wall Street is looking for as home builders come out of this down cycle and have enough cash to grab market share and acquire the A-rated properties."
Wanzer says it made sense for Centex to sell HomeTeam Pest Defense — and it was also great timing for Rollins to acquire this rapidly growing company.
"There was obviously some strong financial pressure on Centex to sell HomeTeam Pest Defense," Wanzer says, noting Centex was approached by a number of parties to see whether it would spin off HomeTeam.
FREEDOM OF CHOICE
"I will say this about Centex: They gave me, and my senior staff, a lot of leeway in allowing us to choose who we wanted to partner with," Wanzer says. "We looked at private equity firms, but they are really all about cash flow. For us to have made good short-term, bad long-term decisions, we would have had to take a lot of expense out of the company. That would have hurt our long-term growth possibilities because we would have had to cut people and cut overhead."
Glen Rollins, vice president of Rollins and president of Orkin Pest Control, came to HomeTeam and told Wanzer and his staff that he knew the company had a great business model, a good reputation and good people. He indicated to Wanzer and his staff that he thought this would work by operating HomeTeam under the Rollins umbrella.
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After the sale, Wanzer, his senior staff, Glen Rollins and his group, hit the road. "We went to our branches to let everyone know that we are still HomeTeam and we will still be doing business as we normally do business, but we have a new owner," Wanzer says.
"I probably met with 80 percent of the branches myself," he adds. "Rollins made a point of saying that we are going to grow and we are going to get more customers — and we will need all of our people to serve those customers."
HomeTeam has grown from $18 million in revenue with 13 locations since Wanzer became president in 1998 to the current figures of $130 million and 50 offices. Its branches are located in what Wanzer describes as a "smile," which starts in Washington D.C. and extends to Sacramento, Calif. and into the Southern states.
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