The Boardroom Buzz: Grow, Sell, or Exit

Private equity has demonstrated increasing interest in the pest control industry. What’s the draw for the Clairvest Canuck combo of Michael Castellarin and Mohit Kansal? How much longer must they eagerly wait before the right opportunity presents itself? Now, if only Patrick can properly pronounce their names… Paul is familiar with private equity’s ‘second bite of the apple’ cliché, but is it appetizing enough for Patrick and his Texas firm?  How does Clairvest’s investment thesis and strategy line up with previous Buzz guest & Wall Street equity analyst Tim Mulrooney’s? If angels endorsed Episode 19, you would hear them singing about Michael Porter soft-circling capabilities to bite apples with synergy during M&A season, and how that affects shareholder goals and objectives who may self-select. As a side note, Patrick already has plans to chat more with the Clairvest combination to fund his Choctaw Land Casino plans. Guest Contact Info Michael Castellarin / michaelc@clairvest.com Mohit Kansal / mohitk@clairvest.com

As newly minted grads from the University of Georgia, the world was their oyster. But finding themselves in careers that no longer excited them, they decided to head off into the world…ending up in the US Virgin Islands working at a diner. After retiring to St. John in their early 20s, they decided it was time to make their mark on the business world by taking over their father’s pest control “business.” In this episode, we learn how these two brothers took their father’s $250K “business” and grew it to over $7M in revenue and multiple years on the Inc. 5,000, PCT Top 100 and Bulldog 100. We also learn what’s it like to run a business with your brother and ultimately sell it to a publicly-traded company. The story of Inspect-All Services is a tale of inspiration, trial and error, and family business. What would these brothers have done differently looking back? How did they grow one of the fastest growing companies in America? In listening to their story you’ll quickly realize why Paul says, “If I were shipwrecked on a tropical island, I would definitely want to be surrounded by only women, but if there had to be two guys on the island, I’d want it to be Brian and Brandon.”

Paul and Patrick start the show by celebrating The Buzz’s #1 business podcast ranking in Seychelles. Episode 14 — Buy-Side: “The Opposite” tipped the scales with listener questions. Patrick thought the he could one-up Paul by blindsiding him with a question or two from the mailroom, but Paul rope-a-doped with an extended sell-side role play scenario. Sell-Side Sensei and M&A Master Paul Giannamore took Patrick to school. Patrick may have made a fool of himself (again), but he’s recovering after tapping out. There is a lot more at play than just negotiating money and terms. Controlling the process is the key to superior results.  Sitting alongside his fellow Boardroom Buzz listeners (learners), Patrick does his best to keep up in the negotiation role play.  With Monopoly money on the line, you can still hear Patrick sweating through the microphone as the interrogation goes into overtime, while Paul exercises grace and patience with his white-belt student. 

Brett Ponton is rolling out of rubber retail into the revolving ServiceMaster CEO seat. Does he check guest co-host and EPS M&A Director Andrew Barrow’s boxes, or will the Board be calling in their own retreat? Paul doesn’t always agree with return guest Jamie Clement, but Paul gives his ‘million percent’ ( 💯 ^ 💯 ^ 💯) approval of Jamie’s take on a company going public. Speaking of going public, COULD Patrick take his company public through an intrastate offering? Also, what’s more likely to happen to a company in the top 10 than going public? While there are similar views on taking a pest control company public, is discussing innovation going to divide the four-bald-guy-clan? The Nords have immigrated to the States, but will they bring their socialized pest control with them? Did somebody mention Copesan? Where will that rabbit trail lead us? Stay tuned-in for the great debate of acquisitions. What makes them accretive? How can one bad deal ruin the bunch? With 30 of his own executed deals, Andrew isn’t slow to share his opinion on the matter.  Do not grow weary of Paul’s spaced repetition : companies with legit capabilities... Of course this Jamie Clement episode wouldn’t be complete without a few sports analogies thrown-in.

Asset managers, hedge funds and private equity firms, collectively managing almost $1 trillion, call on Tim Mulrooney for his investment advice. As William Blair’s service analyst, he covers 20 stocks, but spends more than 50% of his time focusing on the pest control and three key players, Rollins, ServiceMaster and Ecolab. Tim and Paul have debated valuation, asset price inflation, industry growth and fundamentals for years, but today he joins Paul and Patrick on The Buzz. When Tim isn’t consuming The Boardroom Buzz, he’s consuming Milk Bottle Cookies. And when he isn’t consuming cookies, he is shopping for pest control services to test providers — rotating service providers as often as a termite swarm. In an episode that barely squeaked by Tim’s compliance department, join Paul and Patrick as Tim details his thesis on the growth of the pest control industry and what he’s telling investors about where to put their money. Email Tim for access to his freshly released report (tmulrooney@williamblair.com)

For nine years, Patrick has asked Paul about buy-side M&A in order to grow his Texas-based pest control firm. While Patrick knows that Paul’s true love is sell-side advisory, he also knows that Paul used to work for one of the largest buyout shops in the world and has advised publicly-traded companies on setting up their M&A departments and buy-side M&A processes – such as valuation modeling and negotiation strategy. But Patrick is extremely persistent… Patrick: Paul, what about buy- Paul: No Patrick: What’s up Paul? I was looking at this potential acquisition.. Paul: Why do I even answer your calls? Patrick: Hey, when should we think about buying... Paul: {Click} Patrick: Paul? Paul? Are you there? The good news is, our listeners have sent in a ton of buy-side questions that Paul can no longer avoid. So under the guise of listener-submitted questions, Patrick slid in some of his own questions, finally to be answered.  Listeners asked about: how acquisitions turn out years later, how a privately-held pest control company can access the corporate bond market, but most importantly, listeners wanted to know how they can create value by doing small acquisitions themselves, which is the core of the discussion today. A perfect combination of simplicity, bottom-feeding, timing and relationship-building may get you in the door, but how do you get a good entry price? After recording, Patrick realized that this is only the tip of the iceberg on the buy-side of M&A in the pest control industry. Cookie count: 2 Seinfeld references: 1

Industry colleague Andrew Barrows, head of M&A at Environmental Pest Service, joins The Buzz this week as guest co-host to interview equity research analyst Jamie Clement. When Andrew listened to Episode 6, he contacted Paul and Patrick and said that he wished he had been in the room with them to talk shop with Jamie. This week, his wish was granted. He was brought on The Buzz for a lively discussion with Paul, Patrick and Jamie. Patrick and Paul decided to make the first half of the interview a standalone episode because it dealt with one topic, TruGreen’s recent announcement that it had entered the pest control industry. The second half of the interview, covering a variety of topics, will be released soon.

In this Episode, Patrick and Paul discuss Terminix Commercial pulling millions of dollars in Copesan accounts from Copesan partners and affiliates, Potomac's Nomor transaction being nominated for European Transaction of the Year in the Nordic Region, three kinds of benchmarking (internal, competitive and world class), the subjective nature of value and its impact on incentive structures.... and also a rogue, naked technician with a pool cue in his behind.  The Boardroom Buzz was recently added to the short list of pest control podcasts at Feedspot.

Attorney Mike Stanczyk has advised on over a dozen transactions in the pest control industry, many of them with Potomac. Paul and Patrick along with Mike, discuss the expertise that a specialist attorney brings to the table when the stakes are high. Mike’s practice focuses on transactional law issues, including mergers and acquisitions, buying partners in and out of operating entities, executive compensation, intellectual property, contracts, and compliance issues. Mike's firm also provides tax counseling, trust formation, economic incentives and real estate services. Mike Stanczyk is a partner at Lynn D’Elia Temes and Stanczyk, a boutique business law firm with offices in Syracuse New York and New York City. 

Paul and Patrick respond to two PCT Top 100 listener questions with a previously glossed-over term from Episode 3, proximate objectives. By the way, what are proximate objectives? Don’t worry, Patrick asks for you. The strategic acquirers are doing some thing(s) right, depending on the company, the point-of-view, and apparently what today’s date is. Does it matter? We drop a few names such as Rentokil’s Andy Ransom and Certus CEO (and Episode 7 guest), Mike Givlin. Topics include : Aligning shareholder goals and objectives for your business, preparing a business for an acquisition anticipates all potential exit outcomes, and benchmarking local pricing. Have you considered selling off distant routes to increase route density and in turn your gross margin? We discuss that in today's episode. P.S. What does Chuck Norris have to do with pest control?