The Boardroom Buzz: Grow, Sell, or Exit

Last week’s inspirational episode with Shelby Hawkins still has The Boardroom picking up the pieces. Paul summed up Shelby’s interview best: ‘no excuses’.  It’s a good time to catch up on Paul’s New Year’s Day board meeting. Paul gives feedback on the P&L’s, incentive structures, and management reports. There is a give and take to incentive structures. Who knew that a hedge fund conference on modern portfolio management theory would spiral into giving Dennis Rodman free throw lessons? How will Company Bravo’s “Timmy” stack up at the line? Where is the balance between incentives and preventing demotivation? It’s a yin and yang exchange. Speaking of balance, The Matrix gets a nod during this week's compensation conversation. It’s on the record. Paul commits to writing a "Nerd Nerd" paper on the organizing mechanism spectrum in pest control companies. As the loyal listeners know, Patrick takes great joy in packing events on Paul’s calendar. As if Paul’s schedule isn’t busy enough, stay tuned for a combined presentation on the chart of accounts (Episode 26), employee metrics (Episode 34), and (an updated) Aftermath. The chat has Patrick asking if there are common conversations following a preliminary valuation. Are there owners that are not willing to make changes? A simple question about routine EBITDA adjustments leads to a consultation on narratives and the ‘interplay between growth rate and profitability.’ It turns out, it’s a lot more than adding and subtracting when the acquirer takes over. Patrick didn’t see it coming, but the benchmarking debate returns. Paul: “If anyone gets anything out of this episode. You are not selling the past. You are always selling the future.” Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

Shelby Hawkins found herself in pest control with 3 kids, 2 college degrees, 1 ex-husband, and 0 business experience. Her maternal determination brought her from food stamps to financial freedom. As a pest control pioneer, Shelby broke the glass ceiling but in her humility, she credits providing for her kids. It wasn't hard enough that she was outnumbered as a female in pest control, but she found her state inspector making weekly visits. Her female point of view set her apart during real estate interactions in Tucson, AZ. Ironically, real estate wasn’t ready for Shelby when it became time to buy an office. Shelby attended a national trade convention, but still found herself as an outsider. Her determination kept her focused on learning from others. Years later, Shelby recalls Don Jamison offering a helping hand all the way from Memphis. Is self-talk part of Shelby’s success? After reading Dr. Joseph Murphy’s book, Infinite Riches went from subconscious mind to landing in her lap.  Listen to how entitlement and false loyalty surfaced when it was time to sell 5 Star Termite & Pest. Even in her retirement, Shelby is practicing what she preaches: get out of your comfort zone. Enter Kevin Burns and Arrow Exterminators. Now with $280 million combined between 137 branch offices, Arrow was the perfect fit for Shelby’s business. The Boardroom debriefs on Shelby’s love for working in the field. Join us as Kevin shares from his sixteen years of experience watching owners unwind from their businesses. Arrow’s culture is clear as Kevin shares their goals to keep 100% of their customers and employees following an acquisition. Paul gives credit to Kevin, Emily Thomas Kendrick, and Tim Pollard as they welcome new team members to their Arrow family. Listen for that same family approach during the discussion of branch size and employee opportunities. In terms of the global economy and pest control’s impact on world health, industry perception is no laughing matter. Who knew that encouraging training and licensing would put Patrick on his soapbox? Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

What has Paul learned from The Boardroom Buzz, and how it has changed his perspective? It's only a matter of minutes before Paul reminds Patrick of his Anticimex HQ boardroom conversation. Jarl Dahlfors shared his Quality, Profit, and Growth philosophy in Episode 24. With a quality-first priority, it’s time to hear the realities of chasing shiny objects vs. making internal improvements. What makes up an effective board? Maybe better asked, who makes up an effective board? Taking a cue from the great Stevie Wonder, Board Member Paul finds himself with ‘No New Year’s Day to celebrate’. Paul confesses to his living laboratory, Company Bravo, and his mad science experiments. In light of Bravo, it’s time for another chat about incentive structures. When it comes to outsourcing capabilities, does call center overflow pay for itself using a company such as Slingshot? Patrick finds himself in confession for egregious sins committed years ago. When it comes to sales, which offerings should be considered and likewise avoided? When it comes to leveraging a customer base, does it make sense to acquire a similar business or would a joint venture make for a better return? Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

'Twas the night before Christmas, a Boardroom or house, Not a creature was stirring, not even a mouse; The live traps were set by the chimney with care, It’s showtime, Paul G, let’s get on the air; Jamie Clement chimed in with Milo his cat, The Boardroom opens up for a hot mic chat; Listeners sent in questions and summoned the bookies; Will Patrick give mad props to Milk Bottle Cookies? Knowing when to sell can be tricky, Will prices inflate or find themselves sticky? Seismic re-ratings in the public market, Could trigger owners to roll up the carpet. The Top 3 players may outgrow the ninety-seven, Aggressive offers could force concession; Great questions come out on this inflationary climate, Let’s light wads of cash like a government pirate, Milo’s master purrs on about management teams, While business fundamentals affect valuation extremes; In-house or outsource your business capabilities? 2020’s Buzz word deserves its nobilities. The clips proclaim ideas implemented, It tops off a year that was unprecedented. "Now, Todd! now, Daniel! now, Shane! now, Andy! On, Ben! on, Stewart! on, Liz and Jesse! Will multiples differ between resi- and commercial? 35 episodes so far, and some were controversial. Future returns will depend on the vaccine, We all cheer for the pest cash machine. St. Paul G gives in to a geography question, Patrick wants to know also via his confession— As it gets closer to sell, what should be done? Chuck Norris returns for another pun run. Better asked, should it be what not to do? Impairing your value, pre-Buzz, who knew? Signing off for the year, The Buzz gets sentimental, Big shout-out to Dylan for all things instrumental; The Listeners, the guests, and guest co-hosts surround, We do this for you. May your businesses compound! We’ll return next year, there’s more to address, Happy New Year! Happy Festivus! Everyone, God Bless!

Mark O’Hara stepped out to step up the family business. Is this wisdom for future generations of Buzz listeners? Mark served his time at both the US Army and Anheuser-Busch before rejoining Anderson Pest Solutions. Mark built on his non-pest experience to rise in the ranks at Anderson. His dad started it, his brother primed it, and Mark and his nephew, JT Barnard, scaled it. Mark and his nephew ultimately sold Anderson to Rentokil in 2015 with a $21M top-line mark. People differentiate, not materials. Mark gives tangible examples of culture in this Boardroom conversation. Recruitment became a critical function as the business thrived. Mark tips his hand at a recruitment target outside of pest control. What is Mark’s take on leveraging employees’ relationships to grow the organization? What about recruiting from within the industry? He even shines light on the inevitable blinders surrounding employee interviews. Have you ever felt like sticking your neck out to hire someone? Mark suggests a solution for that. It is hard to fathom building commercial sales machine without trials and tribulations. The conference room conversation doesn’t shy away from ‘sales vs service’. Town hall meetings, individual performance metrics, and committee feedback built the accountability culture. From grading leads to fixing funnel flow, Anderson’s sales process evolved. Patrick Quigley would be proud to hear that Mark refers to hot buttons and asking for the signature in this visit.  In battle-field fashion, Mark would often start new projects and then walk away. Mark’s entrepreneurial spirit led to switching course too often. It may not have been self-realized though. As ‘The Way of the Shepherd’ and ‘The 4 Disciplines of Execution’ were recommended to him, he gives his seal of approval to Buzz listeners. When the Chicago climate suppressed pest pressure, how did Mark manage overtime discrimination? In Episode 5, Tony Sfreddo discussed segregating his commercial and residential technicians. How did Anderson structure its technicians’ routes? If Mark was dropped into a $2-3 million business today, how would he think about scaling that business? Tangible takeaways abound in this interview with another PCT Top 100 Great. Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

Exciting opportunities abound for David Billingsly, Shane Hoy, Ben Hoy, Jon Hoy, and the Pro Pacific Pest Control team. As Anticimex goes west, J. Peterman pays a special visit to congratulate Paul and The Mex aka Franco. Guest co-host David 'General' Billingsly returns to discuss his new role at Anticimex, and is greeted with his new nickname.  While David frowns on the nickname, it's the title ‘boss’ that gets him on the corporate soapbox. Speaking of titles, David welcomes Shane to the ‘employee’-side.  'Dollar Bill' David crosses the Mississippi to take the lead as Anticimex Western Region President while Shane has high hopes for DBigs' acquisition experience. What gold will they discover together in California?  Buying is the easy part, especially for David. He has a lot of experience acquiring businesses – 13 in total – while at American Pest. Paul and Shane ask him about lessons learned during integration. Recently Anticimex entered Colorado and Arizona with Kevin Lemasters' EnviroPest and Dena Berg's Northwest Exterminating, respectively. Paul explains his take on what these acquisitions do for the West coast.  Shane discusses how he announced this acquisition to his staff well before the closing. Would this acquisition have happened for Pro Pacific if it wasn’t with Anticimex? What is the next chapter for Pro Pacific’s Cinderella story? Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

What could be worse : a multi-million dollar wiring snafu or another extortion at the closing? If that question is being posed, then you know it has been another long week in Paul's busiest M&A season. It sounds like these uninvited experiences will remind listeners of previous episode discussions. Some acquirers are sitting on their announcements, but not Anticimex. AX is proud to announce its entry acquisition into California with PCT Top 100 Pro Pacific Pest Control. Congratulations to the Hoy Boys - Shane, Ben, and Jon! Did they really tell their staff a week before the deal finalized? Paul has high hopes for freshly-appointed Terminix CEO Brett Ponton, but Paul is quick to recall when TMX fell from grace & left the client at the altar in the Fall of '19. Looking forward into 2021 and 2022, how will Rentokil deploy its 50-basis point buying power? What new markets will open up for acquisitions? What can pest control businesses do as they look to sell in the next two years? Like a good preacher, Paul reinforces the future in contrast to the past. From preacher to professor, Paul puts on an economics class. Tune-in for a brief lesson from Consolidation 101. Patrick has more buy-side vs sell-side questions. What happens when the 'green visor' buy-siders attempt to preempt process? In his tried and true Texas vernacular, Paul likens himself to a cattle auctioneer champion. Speaking of green visors, Cory “The Tax Nerd” Vargo steps in to answer listener-submitted questions on employee benefits as well as financing. From co-host to guest, Paul appeared on Germany-based Talking Pest Management hosted by Daniel Schroeer. Patrick had some takeaways (and as always, some jealousy). More road-show episodes are in the works. Paul and Patrick plan on crashing some upcoming U Group gatherings. New Orleans. Hawaii. Who knows? Paul's invitation will grant him access. Patrick may have to bribe his way in with some cookies. Also, Paul hints at another Stockholm trip for an EQT announcement, but will Patrick make it across the Pond this time? Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

Doug Stevenson and his brothers grew Modern Pest Services to $18 million before selling to Anticimex. It would be hard to find a process at Modern in which Doug did not include in a financial system.  Doug found himself entrenched in cost analysis study after study. It was his tenacity that helped 5x Modern's net income in one year. Adjustable initial service charges and subscription billing helped Modern weather New England seasons.  With a name like Modern, it's hard to avoid innovation. In the early 2000's, it was Doug who set the bar with PestPac routing & integrations. Doug recounts working with Griffin Pest's Jeff Spencer & Pam Blauvelt integrating VoiceShot with PestPac. Although driven by spreadsheets and returns, Doug opens up about people, management, and corporate elbows. As structured as Doug is, he says that there is one trait that determines success in a business partnership. What is it? There are several new buzzwords (-phrases) coming out of this episode : Elegant (complex) solutions to complex problemsFinancial predictability to strategic decision makingROI makes the world go-roundBeware of shiny thingsAlways more risk in a non-diversified portfolioBalance emotions with data From WIPFLI Partner to Boardroom Buzz guest, Cory Vargo steps into this episode as a guest co-host. It was Doug Stevenson who gets 100% credit for introducing Cory to the pest control industry. Apparently, Doug set a high bar. Cory discusses that high bar as well as Doug's cash after tax black and white decisions. Cory sticks around to shed light on the deferred revenue black box, cash vs accrual accounting methods, and shareholder partnership issues. He adds his opinion on scaling accounting capabilities with a growing business.  Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

If Scott Stevenson is the Senator, then Paul Giannamore is the Brother Whisperer. Paul has an epiphany moment as Scott turned the tables and questioned him about his custom communication methods. As a third generation co-owner with brothers Doug and Rich, Scott takes us back to Modern's early days. Who knew it would involve repairing a toaster of all things? In his twenties, Scott visited with Harvey Massey at Massey Services and Joe Thomas at Arrow Exterminators. These learning opportunities helped shape Modern's branch manager-centric structure. The Stevenson Brothers furthered their development by joining the ranks of Associated Pest and later The U Group. It doesn't sound like much of a 'short straw', but one of the three brothers had to stay on post-Anticimex acquisition. Scott recalls his early days at Anticimex, and how he ranked against the global branches (and himself).  The Senator didn't overstay his welcome as a US-Sweden diplomat, in fact, he found himself as the VP of Operational Excellence. As a AX VP, Scott helped US Anticimex platforms balance best practices with their unique sales models. Several Buzz-staples in this conversation, including subscription billing, service frequency, culture, and acquisitions. From one RV'er to another. Court Parker is nearing 100-days on his Pest Control Technology and Control Solutions Inc road trip. Paul and Patrick invited Bug Busters USA CEO Court Parker into The Boardroom to discuss Senator-turned-Trailer Park Boy Scott. As a U Group co-founder, Court gives some history on his relationship with Scott and the peer group. Co-Produced, Edited, and Mixed by Dylan Seals of hdaudiopost.com

For more than twelve years, John Myers, Rentokil North America CEO, has scaled a regional pest control business into a national empire. John describes the nuanced difference between success and excellence as his company has grown. John opens up about fear of failure, a trait he shares with Rentokil Initial CEO Andy Ransom. Speaking of Ransom. How does John talk about their relationship between flagship Rentokil NA and HQ in London? As a serial acquirer, John goes into sales mode to describe their differentiated capabilities, including a very deliberate and choreographed due diligence process. John highlights the #1 consideration that Rentokil North America has as a buyer, which may remind you of Episode 14. Similar to Episode 17, Paul engages with John as if he was a $5 million pest control business CEO. This episode wouldn't be complete without first discussing route density, its benefits, and the 'best new customer'. Before engaging a new customer though, John stresses the importance of customer retention. Listen to John discuss time spent on the front lines with specialists and customers. Paul describes the role of a CEO; even those that aren't in the PCT Top 100 top tier. John doesn't shy away from responding to what wasn't all good with "Allgood" as well as room for improvement with regard to mosquito and tick opportunities. Patrick didn't fail to ask John about brand equity. It turns out that in the future when asked this same question, John can reference this episode.