Owning a pest control business used to be the best-kept secret — but now the cat is out of the bag. For many years, companies quietly produced predictable cash flow, high recurring revenue and recession-resistant performance, but few people outside the industry realized how valuable these businesses were. Most owners operated under the radar, and the broader investment world hadn’t yet discovered the strength of the business model.
But that has changed. Private equity firms, strategic acquirers and investors have now recognized that the pest control industry is one of the most attractive service industries in the U.S., which makes now the best time to sell.
Key takeaways
- A seller’s market: Record-high multiples and high demand from over 30 private-equity-backed firms have created a peak exit window for PMPs.
- Recession-resistant value: The industry’s proven resilience during the 2008 recession and COVID-19 pandemic makes it a “safe haven” for capital.
- Flexible exit paths: Sellers can choose from several transition roles, ranging from immediate retirement to full-time leadership or part-time ambassador roles.
- Timing is critical: Economic windows like interest rates and capital gains tax laws are subject to change; striking while the “iron is hot” is essential for maximum ROI.
Why investors are targeting pest control
The “secret” of the pest control business model is its stability. Today, several factors are driving valuations to historic levels.
FACT: There are now more than 30 private-equity-backed companies in the pest control industry, with many more looking to jump in this year. In addition, several existing pest control companies are acting as strategic buyers — some that have been acquiring for years and some that are making their first acquisition.
7 reasons to consider a sale:
- Record-high multiples: Buyers are currently paying top dollar for quality companies that stand out.
- Stabilizing interest rates: More predictable financing allows acquirers to plan and execute deals with greater confidence.
- Large capital reserves: Private equity sponsors are sitting on massive amounts of capital that must be deployed and invested.
- Strategic growth needs: Public and large private strategic buyers must show continued growth to their shareholders.
- Proven resilience: As seen during the 2008 recession and the COVID-19 pandemic, this industry is essentially recession-resistant.
- High EBITDA margins: Long-term recurring service agreements translate to strong margins. When you have high demand and a solid leadership team, you are positioned perfectly for a sale.
- Limited supply: There is a limited supply of “best-in-class” companies. Potential acquirers will compete aggressively for those that stand out.
Weigh your options: Choosing your transition path
Many flexible transition paths are available to owners looking to sell. You can choose the right fit based on the buyer and your personal goals.
- Consulting agreements: Typically, we see sellers stay on for three to six months to ensure a smooth handoff.
- Full-time leadership: Some owners opt to stay on working full-time under the new ownership.
- Ambassador roles: Others choose to work part-time in an ambassador role, maintaining key relationships without the daily operational stress.
Know your worth
As advisors, we can tell you that economic windows don’t stay open forever. Interest rates, capital gains taxes and consolidation waves are all subject to change. Capital can be reallocated to other industries and competition among acquirers can eventually cool off.
At this moment, it’s a seller’s market for pest control acquisitions. Everything in life is about timing and you want to strike while the iron is hot.
Are you ready to take advantage of today’s market conditions — or at least learn what the true value of your pest control company is? You just may become inspired to explore a sale.
Stuart Aust and Daniel Aust can be reached at stuart@theaustgroup.com and daniel@theaustgroup.com, respectively.
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