The Boardroom Buzz: Grow, Sell, or Exit

Not a week goes by where Paul and Patrick don’t hear about Episode 10 with Mike Rogers (if you haven’t listened to that episode, you might want to before you listen to this one). Any Buzz listener would agree that Mike is the kind of guy that you want to hang out with and chat about life and business. No stranger to automobile love affairs, the road trip was made complete with Dylan making the drive down from Tennessee.  After spending time in Mike’s collector car showcase, the Rogers’ dining room table transformed into a recording studio to the benefit of Buzz bingers. Not only did it make for great coffee talk with a repeat guest, but the brains (and emotional stability) behind Killingsworth joined in on our Buzz banter. You’ll even hear Marley, the five-month old labradoodle, make his Buzz debut.  What tales didn’t make the Episode 10 tapes? Which stories are worth revisiting with Debbie’s joyful laugh? As the Killingsworth Kouple reminisce on their business and life together, they dish out sage advice on business, life and relationships as well as incredibly funny stories of the early years in unlicensed pest control. At the end of the episode, Paul finally confronts Makenzie, the talent behind Milk Bottle Cookies. Does Paul endorse the infamous cookie, enraging the Mex, or does he cast aside Patrick’s not-so-secret pleasure, winning the Mex’s praise? Patrick’s takeaway : before returning to Charlotte, learn to drive a stick shift.

Jeremy Kreer grew up in a family pest control business. Jeremy opens up about Advanced Pest Management’s operations behind closed doors. All seems on-track for future generations until Jeremy’s parents go through a divorce. Dealt a bad hand, how did Jeremy buy out his Mom’s shares, and how did that affect the family dynamic? To drive the wedge even further, how did Jeremy’s dad respect Jeremy as a business leader? Enter Nam, Jeremy’s brother, full-time in the business. Paul remembers Nam as a rockstar salesman, but as the business transitioned to Jeremy and Nam, how would it affect their relationship? To further complicate the 3rd generation ownership, what about relationships with their siblings? Did the extracurricular dynamics call for extra TLC when it was time to sell? What about awkward explanations with potential suitors? Flashback to previous conversations on the Buzz — On Episode 11, Paul spoke about shareholder objectives. The Kreer family dynamic reinforces the importance of aligned business partners. Jeff Annis and Dena Thomas discussed their open book management on Episode 22. Consider forced transparency as doubt creeps in.  As another 3rd generation business owner, Go-Forth Pest Control CEO Chase Hazelwood, joined us to give his input on Jeremy’s story. It is interesting to hear how the Kreer family’s story may affect Chase’s business planning.

How do you make a show about tax more exciting? That is a low bar, but Paul and Patrick invited Dylan Seals to spice it up. Dylan literally hears every cough, um, and extracurricular story. The audio engineer keeps the Boardroom Buzz out of trouble. It’s interesting to hear what Dylan has picked up that Paul and Patrick have put down. Straight out of the gate, Cory Vargo isn’t afraid to address the upcoming presidential election’s impact on taxes. How could a change in politics overhaul tax laws and the economy? But who is Cory? Before WIPFLI became a Top 20 accounting firm, Modern Pest Services CFO, Doug Stevenson, retained Cory Vargo to break a tie between two other tax advisor opinions. What started as a job well done for the Stevenson brothers, has led to Paul involving Cory on several multi-million dollar pest control M&A transactions. It begs to ask the question : Why do PCT Top 100 companies choose to add Cory to their strategic team even after long established tax advisor relationships? Pop quiz, Hot Shot… Paul shoots a pop quiz in Cory’s direction : “How might a taxing authority say, well, wait second, you've been in business two years. You've got a bunch of customers. You're selling those customers. They're under some sort of contract, but you want us to tax you capital gains. We want to tax you as ordinary income. Can you imagine why that would be the case?“ Does Cory’s answer meet Paul’s experienced expectations? Creative and tax are two words not often found in the same sentence. How did Cory construct a reorganization to save a seller from paying $2.5 million in taxes? As the episode guest count increases so has Patrick’s intrigue about CFOs. Patrick asks Cory how adding a fractional CFO adds to the bottom line, and Paul helps clarify controller and CFO roles. Stock purchase vs asset purchase, and why. Enter Episode 5 star Tony Sfreddo’s Triple S case study. Is your pest control business currently a C-Corp and considering making a S-election? Want to avoid paying punitive fees to the IRS? Listen now.

It is one thing to look at the best industry performers, but what happens when you dig deeper into profit and loss statements?  Anticimex CEO Jarl Dahlfors attended ‘Pest World Congress in Nashville USA’ to research best in class in the industry to understand what was possible for Anticimex. Paul explains how Jarl now focuses on internal benchmarking. Taking a play from Michael Porter’s value chain analysis, Paul breaks down benchmarking like Jarl would at Anticimex.  Paul is going to release a standardized P&L chart of accounts for The Boardroom Buzz listeners. Where does margin development max out in the pest control industry? Apples to apples : compare margins with other pest control owners and world-class companies. One of Paul's current sell-side clients recently spoke to a potential acquirer that operates in his area :“I don't even care about what you guys do. I don't even pay attention to what you guys do... I'm a market leader and sometimes market leaders have to forget what the competition is doing and they just have to get out and lead.”  Talk about not biting the hands that feed you… how do employee [unexpected] emotions change after an acquisition? Also, what is the importance of the last three years before selling? The Buzz’s pilot episode was ‘Deals, Contingencies, and Gotchas’. Listen to Paul’s new take on due diligence and his stance on contingencies. Speaking of due diligence gone awry, who is to blame for attrition after Terminix acquired Alterra? Oil and water don’t mix. How could foosball-playing, segway-riding, hipster kids integrate with Terminex guys, or was the culture clash inevitable? Paul answers several listener-submitted questions, including :  Provide a little more insight into Anticimex’s benchmarking process. How does it actually work in practice and how can I utilize it in my own business? Assuming it would be Anticimex, will Jarl eventually transition the US brands into one brand?  With acquisitions in general, what are the first priorities in transitioning employees and customers to the new brand (assuming a brand change) or management? To put yourself on the list to receive the pest control P&L chart of accounts, send an email to theBuzz@potomaccompany.com

Jim McHale's dad knew his way around the bars. He cleaned beer taps when he wasn't logging hours at New York's Sing Sing maximum security prison. The prison guard network jumpstarted the family into finishing at #32 on the PCT 100 before selling to Anticimex in 2019.  In this episode, Cornell grads, Jim and Paul, continue their banter from their 10+ year relationship.  Conducting skip meetings and measuring Employee Net Promoter Score (eNPS) are two ways that Jim engages his front-line employees. You will hear him preach the importance of relationships in a pest control business while unifying a diverse JP McHale culture.  Imagine the countless questions over the years :  'Jim / Jimmy / Mr. Jim / Mr. Jimmy / Mr. McHale, this happened : ____________. What should we do?' No matter how you refer to Jim, his response will not delineate [shouldn’t this be deviate rather than delineate?] from 'What's best for the client?'. The Buzz suspects this is JP McHale's Golden Rule. Unique capabilities include JP McHale Pest Management's 'Inner Circle' concierge service. Why wouldn't you when you have customers paying upwards of $27,000 per year - yes, a residential client. What are Jim's thoughts about pre-billing customers for the year?  Jim gets real about his family's multi-generational business. Without pause, Jim recites Martin Luther King, Jr. as a glimpse of the behind-the-scenes realities.  Jim stresses the need to differentiate in a commoditized business. He continues to chase marketing, branding, innovation, and technology now as an Anticimex platform.  When I think about Jim McHale, I think about “innovation around the edges,” says Paul, “the guy has really mastered making the ordinary, well, extraordinary.” Jim’s humility plays out as the episode unfolds. He gives credit where credit is due. This list may not be exhaustive either:  Patrick McCauley Bernie Herman Bill Thompson Gil Bloom Dr. Austin Frishman Doug McHale Rich McHale Dr. Jeff Scott Dr. Ed Raffensperger Shaun Coen Frank Trediti Mike Palmietto Lenny Gray McKay Bodily Jarl Dahlfors Wallenberg family Tony Ramirez Tony Fortunato Tom Pederson Bob Sameth Norm Cooper Bob Suriano David Billingsly Tony Yochum David Locke Brian Alexson Albert Cantu Norm Goldenberg Matt Nixon Irwin Noval Robert Seeger Mohit Kansal Paul Bergmann Mikael Vinje Steve Good Finally, Paul references Ethan Vickery and Ronen Amichai at VM Products and PESTOPTIX.

Paul literally steps into Anticimex's boardroom in Stockholm and sits down face-to-face with CEO Jarl Dahlfors, for this intimate and hard-hitting interview. Although Paul prides himself in being the preeminent, global expert on pest control valuation and M&A, our team here at The Boardroom Buzz is wondering if he missed his calling as a 20/20 journalist. As CEO of Loomis, Jarl turned a low-performing business into the darling of the cash management and armored car services industry by decentralizing its business model and changing its culture. As head of a direct competitor of Brinks, it was Jarl who dethroned at least two Brinks’s CEOs – according to equity research analyst Jamie Clement – earning Jarl the 'Swedish Beast' moniker.  In the middle of an extremely successful career in the security industry, EQT, owner of Anticimex tapped Jarl to do what he does best, shake up and decentralize a sleepy Nordic business that had been around for almost a century. Decentralizing Loomis paid dividends for him, but how would that play out in another similar route-based business? Jarl battled his critics, but he could see that there was so much more potential for quality, profit, and growth. As the “protector of the branch manager”, Jarl decentralized Anticimex, established benchmarking protocol and has lead his highly-motivated team in building one of the largest pest control companies in the world.  Following the interview, Paul and Patrick are joined by guest co-host David Billingsly, President at American Pest, for additional commentary on what it’s like to be a “country” president at Anticimex.

High pricing for pest control got Svein Olav’s attention as COO of Swedish retail coffee chain, Espresso House. Little did he know that he’d follow the white rabbit into pest control ownership, and bring a company back from the brink of bankruptcy.  After taking over as Nomor’s CEO, Svein Olav quickly made the rounds conducting interviews with both employees and customers. His employees didn’t know what they wanted, but Svein Olav knew what they needed. Svein Olav resurrected a ‘given up’ culture. Take notes on his unique insights on female employees, language diversity, fitness, pay for performance, and celebrating success. The underdog, Nomor, grew to be the 4th largest pest control company in Europe and solid competitor with capabilities to service Sweden’s insurance demands. Nomor’s turn around tale is one for the ages.  Potomac advised Nomor on its sale to ServiceMaster in 2019. The transaction was nominated for Nordic M&A deal of the year.

Jeff Annis avoided pest control growing up. In fact, it’s the last thing on earth that he would choose to do. Which path led Jeff to building a flagship company in Augusta, Georgia? If you could summarize Jeff Annis and Dena Thomas’s business, Advanced Services, then it may be unique. Or it could be innovation. Or it could be culture. Maybe it’s accountability. It’s hard to pin down a single takeaway from their sustainable success. Jeff’s TedX talk gives extra insight on his core belief of ‘great, not big’.  Taking a page from Zingerman’s Deli, their open book accounting method sets them apart. Listen how their employee buy-in has taken them to a new level of profitability.  If you can pass their core value test, video job interviews, random pre-employments drug screenings, and ride alongs, then you may find yourself a self-selecting profit sharing participant.  Stick around for the post-Boardroom franchise discussion. The franchise chat quickly spun into Paul and Patrick scratching the surface on partnerships in pest control. 

As you can imagine, only a few people ever dream or imagine of getting into pest control as a career. Joe definitely took a unique path for his world to collide with the pest industry. Although law school was Joe’s best idea after hanging up his uniform, he found himself at Harvard Business School where he adapted by learning from his private equity and consulting experienced classmates. Paul and Joe revisit their early conversations as Joe was looking to go from no pest control background to owning a $3.5 million business. Joe shares the risks and realities of stepping into a business sight unseen. Also, Paul gives answers as Buzz listeners have asked about the M&A environment in this COVID climate.

Brandon Hier recalls his experience responding to the responsibilities he inherited when his dad passed away and then ultimately selling the family business five years later. As a young teen, Brandon donned a respirator as he followed in his father's footsteps. His life took a turn as he shelved his college education to return home to run the business. Brandon was thrust into an impossible work-life balance as he struggled to build the family business in his father's absence. Not only did Brandon take the leadership position at the family pest control company, but to further the matter, he found himself responsible for his mother’s financial future and retirement. Join Paul and Patrick, as Brandon looks back on his time running the family business, selling it and ultimately exceeding expectations with his new life at Rentokil. Paul and Patrick also chat about ServiceMaster selling their Brands business to do pure play pest.