Ep.36 Mergers and acquisitions updates
Talking Pest Management last interviewed Paul Giannamore from the Potomac Company in late August 2020. In this interview Paul predicted the mergers and acquisitions market would return with force in Q4 of 2020 following a very low level of activity earlier in the year. So, what happened? Listen here to discover.
Paul Giannamore, the managing director of the Potomac Company which has offices in Geneva, Switzerland and Philadelphia, USA, specialises in pest control company mergers and acquisitions across the globe. So, there is no better person than Paul to update listeners as to what has recently been happening in this market place.
Did the market rally?
Paul declares…. a resounding yes. He explains how the coronavirus pandemic caused the M&A markets to virtually seize until the autumn, but then the industry effectively tried to cram the whole year’s activity into the last quarter. Both Rentokil and Anticimex were very active, mostly in North America. Rollins and Terminix were less so. For acquisitions, transaction multiples were as high, or even higher, than they had been in 2019 – ideal for sellers! For 2021 Paul predicts the market to accelerate.
He foresees Anticimex who, in a key event of the year, is to go public launching on the Stockholm Stock Exchange, will continue to consolidate in their existing markets, rather than expand into new territories. Following a quieter period at Rollins, during which time the company went through some senior management changes, he predicts the company will return with a more aggressive acquisitions strategy.
Following their halt on acquisitions in Q4 of 2020, he anticipates Terminix will return, albeit conservatively, to their acquisitions strategy. What is interesting, several of the companies, particularly in Europe, which Terminix virtually overnight withdrew their offers from last autumn will now look to sell to Rentokil or Anticimex.
Rentokil, a renowned deal maker, is already up and away in North America having finalised a number of deals amounting to around $500m over the last three to four months – all part of their strategy to expand to a targeted turnover of $1.5bilion and so reap the benefits of economies of scale.
For all these major international companies, covid actually presented opportunities – the addition of disinfections services, increased domestic work etc – so sales have boomed. However, to retain this level of sales, they will look to acquisitions to maintain this growth.
New kid on the block
The addition of Certus in the US to the acquisitions market is discussed. Operating only since spring 2019, this company has a declared intention of growing by acquisition so as to reach a top 10 position in the PCT top 100 company listing in the next few years. But as Paul highlights, this is a tough call when pitching against the existing four majors with their deep pockets.
Regarding more practical advances, Paul predicts the use of digital technology will continue to grow albeit slowly and steadily by the smaller companies. He acknowledges that many of the activities of the pest control companies are based on the ‘old’ way of doing things, however the uptake of digital technology by the larger clients will drive acceptance forward.