Reputable representation

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September 15, 2023

Illustration: sesame/DigitalVision Vectors/Getty Images

Illustration: sesame/DigitalVision Vectors/Getty Images

Mergers and acquisitions in the pest control arena are complex transactions that require an experienced attorney with at least some knowledge of our industry. Long gone are the days when an attorney would hang his or her shingle out and take on any case that came through the door.

The practice of law has evolved such that an attorney can only competently represent a client in a few select areas. In short, the attorney you grew up with or the one who prepared your will may not be the best choice when you are buying or selling a pest control business.

Desirable attributes

Here are a few points to consider when selecting an attorney to take you through the merger and acquisition (M&A) process:

➜ Legal experience. It is fair to ask about an attorney’s experience. How many M&A transactions has he or she completed? You certainly do not want to pay an attorney to learn this area of the law. Is the attorney actively handling similar transactions? Is he or she familiar with the current market trends
for our industry? Does the attorney have experience working with your broker, certified public accountant (CPA) or financial consultant? Can he or she handle all aspects of the transaction, or will multiple attorneys be necessary?

➜ Industry knowledge. It is vital that your attorney have at least a working knowledge of how a pest control company operates to effectively communicate with you and assess your risk in the transaction. Our industry often uses acronyms and slang such as GHP (general household pests), IPM (integrated pest management), IGR (insect growth regulator), prepays, retreat only, etc., and there is no Babbel app to help others learn the lingo. Sometimes I feel like a tour guide in a foreign country explaining to co-counsel or a CPA what was just said.

Mark Ruff

Mark Ruff

In addition, a buyer will require a seller to execute an indemnity provision for pre-closing liabilities, such as termite damage claims.

In such cases, your attorney needs to assess your risk by discussing your claims history, whether annual inspections occurred, and any conducive conditions addressed. More important, you must have insurance available to cover a claim after the closing occurs.

Finally, an understanding of regulatory matters affecting the transaction is critical, especially when it comes to licensing and the buyer’s ability to operate the business after the closing of the deal.

➜ Sterling reputation. Attorneys are famous for arguing how many angels can dance on the head of a pin. The wrong attorney can collapse a deal by being overly aggressive and not understanding market boundaries.

For example, I was involved in a transaction where the lead counsel, contrary to my advice, had convinced the client (with whom he played golf) that the buyer would waive taking a $63,000 deduction for deferred revenue (prepays) from the purchase price. The attorney was caustic and demeaning in his negotiations, and the buyer walked away from a $4 million deal. The client ultimately sold his business at a significant discount.

So, when interviewing an attorney, ask whether he or she would mind if you could obtain a few references from recent clients (respecting the confidentiality of their respective transactions, of course). The opinion of a satisfied client speaks volumes about an attorney.

Another suggestion would be to ask the buyer, seller or your broker for their opinions of the attorney and whether they would have any reservations on working with the attorney. It is a fair inquiry, as I am often asked for the same.

➜ Fees and costs. The attorney should be able to provide an estimate for his or her services, noting there is always the possibility of unanticipated issues or costs. However, cost should not be the sole determining factor in your decision, as an experienced and knowledgeable attorney works faster, is more efficient, and ultimately is more economical than an inexperienced attorney. Plus, a higher-priced attorney may pay for himself/herself by netting a higher divestiture price.

The attorney you choose will have an impact on the success of your transaction. Generally, you have only one chance to get it right.


How to Find a Lawyer

When it’s time to sell your company, you will need expert advice to ensure the process runs smoothly. How do you find a trusted attorney?

➜ Ask colleagues. Seek out fellow pest control company owners who recently sold their companies, and get their honest opinion about the experts who worked with them on their mergers and acquisitions (M&A). Many successful pest management professionals (PMPs) have remained in the pest control industry after selling their companies, either as consultants or owners of new businesses, and would welcome the opportunity to share references.

➜ Check pest control industry resources. Trade publications (like this one) and pest control industry websites often include advertisements from companies that specialize in M&A. State and national pest management associations also would be able refer you to PMPs who have been through the M&A process.

➜ Ask experts. If you use a firm to handle your company’s taxes or accounting, ask whether they can recommend a lawyer with M&A experience. Experts tend to have a vast network of professionals who work in related fields.

When you do find an attorney, be sure to ask for references and then check them. The sale of your company is too important to leave to someone who lacks the experience your deal requires.

Read the full 2023 Merger Guide in the September issue of the magazine. 

About the Author

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Ruff is an attorney who has primarily practiced in the pest control arena for the past 25 years. His Longwood, Fla.-based practice includes commercial litigation, commercial transactions involving mergers and acquisitions, and intellectual property rights. You may reach him at mark@mhrlaw.com.

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