Selling a Pest Control Company

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Drew Lund

Customer Success Manager at Cedar Systems. Industry expert with experience in multiple sectors across pest control. Executed successful programs in customer success, operations strategy, business and franchise development, and technical project management.

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An Expert Guide To Selling a Pest Control Company

You begin to buzz through your days, no longer laser-focused on expanding your pest control business. 

Your mind that was once tied up in everything inventory, management, and finance is now loosely thinking about hobbies, future vacations, and a cold drink on a beach. 

Is it time to retire?

You grew your business from the ground up, analog and all. 

How are you going to navigate selling your pest control company in an age where everything relies on cutting so much red tape? Who is in the market to buy your business? Where do you even begin? 

Don’t make selling your pest control company seem like a bigger pest than it truly is. This article aims to identify the steps you may want to take when selling your business and how to make your pest control company more enticing to potential buyers.

How To Know It’s Time To Sell Your Pest Control Company

Maybe you’re nearing retirement age. Maybe your company has grown into a huge cash cow, and you’re ready to cash it in. Or maybe you’re making lifestyle changes and running a business just doesn’t fit in your schedule. 

Whatever reason you have for selling your pest control company — when you know you are ready to sell, you are ready to sell.

For years you put your all into this business, so it is only justified to get as much as you can from selling it. You have an opportunity to turn years of blood, sweat, and tears into a nice chunk of change you can nest on while in retirement. 

So wouldn’t you want to increase the value of your company before you sell it?

Cedar Pest has developed software specifically for the pest control industry.

Automate your company and increase its value, streamline client communications, and oversee data and operational reports — all from one “digital ecosystem.” Cedar Pest can help you optimize your time, so you can get started on planning your retirement.

5 Steps for Selling a Pest Control Company

#1: Value Your Company

The first step in selling your company is calculating its value. You wouldn’t put a house on the market without evaluating and listing its worth, and placing your business on the market is no different.

Valuing your company gives you an advantage in the market. If you know your company’s value, you’re more likely to get your money's worth when it comes to negotiating with potential buyers.

Buyers want to know:

  • How much money will this business return?
  • How do the earnings compared to the prices of this business compare to other similarly-sized businesses on the market?

Calculating your company’s value will give you an insight into what to offer buyers, as well as buyer expectations.

How To Value Your Company

You can use this formula to calculate your company’s value:

  • 3x to 4x SDE + inventory or;
  • 4x to 6x EBITDA 

What is SDE? 

Seller’s Discretionary Earnings (SDE) is the total financial benefit a seller receives for selling their business. Expenses like salary, benefits, depreciation, rent and utilities, etc. are all calculated and added back into your net profit before taxes. Essentially, SDE is a metric for determining the history of cash flow between a business and its owner.

What is EBITDA?

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is the measure of historic cash flow without the owner’s earnings as an adjustment. This is typically used for businesses with large annual revenue, such as $2-3 million/year.

A broker or financial advisor can easily help you calculate your company’s worth.

#2: Speak With a Professional

You may be a do-it-yourself kind of person, but there are a few areas like real estate and commerce where DIY will not cut you as good a deal as the experts. 

Professionals like business brokers, also referred to as business transfer agents or intermediaries, know all the ins and outs of the game. You might be worried about giving them a cut of the sale, but you’re likely to get way more for your company with a broker than you would if you attempted to sell on your own. 

Choosing to sell your pest control company through a broker will save you time, money, and effort since they are likely to have more access to:

  • Lenders
  • Market trends
  • A pool of prospective buyers
  • Knowledge of all bureaucratic functions

Get a referral for a reputable broker from other professionals involved in your business, like your accountant or attorney. Interview and vet potential brokers to see which one most aligns with your interests. 

Remember, they may be selling your business for you — but you’re selling a part of that commission to them.

#3: Start Planning for the Sale

Early planning gives you a jump on preparing your business for sale. 

Step back and get a clearer picture of what makes your business promising to buyers and franchises, and improve on the areas you lack. 

You may want to invest a little money into factors that improve the value of your business, like:

  • Brand recognition and marketing
  • Client relations
  • Technology and tools
  • Pest control software

Anything that could make your business more profitable and streamlined will help it make promising returns when you sell.

#4: Take Your Taxes Into Consideration

You’ve owned a business for years and are familiar with taxes. 

You suspect you will have to deal with taxes when selling your pest control company, but you aren’t exactly sure where to start. Depending on your business’ status, the way you are taxed and how much may differ. 

For S corporations, the final sale of the business involves a one-time taxable event. If you are selling your business as a C corporation, this could trigger two taxable events. In that case, the first tax would be paid on the sale of corporate assets and the second tax would be paid on the proceeds that go to the owner(s).

A significant benefit of working with a broker or advisor is the guidance they can provide when it comes to taxes and tax liability. It is important to consider these costs when factoring in the value of your business and negotiating with buyers.

#5: Reach Out To Potential Buyers

If you choose to sell your pest control company through a broker, they typically will have you covered on this front. Reaching out to potential buyers broadens your chances of selling your business quickly — and having buyers compete to obtain your pest control company. 

Acquisitions in the pest control industry have become very common in recent years. You may be familiar with another pest control business that may be interested in absorbing your employees, clients, and assets. 

Whether you’re selling independently or through a broker, reaching out to potential buyers to advertise your business could give you an advantage in the market.

7 Selling Features That Entice Potential Buyers

#1: Existing Customer Contracts

Having existing customer contracts and a substantial client list at the time of sale gives you a large advantage in the market. 

Your contracts and returning customers assure potential buyers that your business brings in clients and money. To prospective buyers, that’s like buying a business that comes with free money. 

Active commercial and residential contracts also show buyers that your business is familiar with handling different types of clientele. Franchise companies love to buy smaller businesses that have a lot of client potential. It saves them money and time to purchase businesses that don’t need ‘building up’.

#2: Attractive Location

Business location can affect the economics of your business, like supply and demand.

Features of your location that could make your business appealing to buyers include:

  • Little to no competition in the area
  • Huge market size
  • High locational demand for pest control services

#3: Meticulous Documentation and Accounting

Data drives the market. 

If you have the metrics and documentation that prove your business’s potential worth, you’ll have the upper hand in the market. Serious buyers want to see how your business interacts with:

  • Market trends
  • Worker shortages
  • Cost increases
  • And more 

What are your taxes like? What is the value of your property? How much has your revenue grown? Buyers are interested in knowing all this and more.

The longer the paper trail, the more enticing your business will be to buyers.

#4: Up-to-Date Technology

What technology are you using to run your business? Is it the latest technology, or have you always played it old school?

Your business tools and technology are assets of your company, and when you sell your company — those assets are a part of the deal. Buyers get a glimpse of your company’s potential through the investments you have made in your business.

These investments can include up-to-date or advanced technology involving:

  • Traps
  • Safety equipment
  • Dusters 
  • Chemicals
  • Tools
  • Pest control software
  • Etc.

The more current your technology, the more potential your business will have on the market.

#5: Rock-Solid Reputation

The value of your pest control company may heavily rely on your reputation. 

Potential buyers want to obtain a reputable business. Buyers will likely research your online reviews and your Better Business Bureau status. Having a trusted name in your area is an assurance that your company will continue to grow as a business even after you sell it.

#6: Eco-Friendly Pest Control

The customer is always right when it comes to the market. 

Your clients have become more eco-friendly throughout the years, so it is only rational to keep up with client demands. Eco-friendly pest control companies are gaining popularity in residential and commercial arenas. 

Presenting your company as sustainable and environmentally conscious is a great way to gain contracts and boost the value of your business.

Cut your use of chemicals or go completely chemical-free by using natural repellents and pesticides. The pest control industry is constantly evolving to provide services that are safer for people, animals, and the environment. Evolve with the industry by continually educating your staff and implementing environmentally friendly practices and services.

#7: Streamlined Operations

Potential buyers want to buy a business that is organized, optimized, and streamlined. 

This is where pest control software can help make your business more presentable and appealing before you place it on the market. 

With pest control software, you’ll find it easy to:

  • Create schedules 
  • Plan routes
  • Handle invoices
  • Pay employees
  • Track your business metrics

Cedar Pest does all of this and more! With our software, you’ll have the technology to help you outpace your competition, improve client relations, and remain organized. Whether you’re just starting out or getting ready to sell, Cedar Pest is software that can help you advance your business at any point.

What Might Decrease Your Company’s Valuation?

The Business Is Dependent on the Owner

Potential buyers are looking for a turnkey business. They want to acquire operations that smoothly transition and immediately continue business like there wasn't a change in ownership. 

If you haven’t already, you’ll want to establish a hierarchy of CFOS, GMs, and other managers who can act autonomously and continue the business after you sell it to entice buyers.

Lack of Distinguishing Features

Brand recognition is a marketing tool businesses use to stand out among their competitors. And it’s a signifier of profitability to prospective buyers. 

Do you have an easily recognizable brand name? Are you known for providing services your competition does not? Are you a known innovator in your industry? 

Reputation and brand recognition increase your business’s value. These two factors show promise when it comes to generating profit, and latent profit is what interests buyers.

If you’re looking to improve your brand recognition and awareness, you could try:

  • Expanding your social media presence 
  • Innovating your current operations with new pest control tech and services
  • Developing and marketing a unique brand 
  • Improving your public relations

Thin Profit Margins

Buyers are generally looking to acquire successful companies.

The more profitable your business is, the more it is worth, and vice versa. Consider boosting your profit margins before selling your pest control company.

To help increase your profit margins:

  • Access each service’s profit margins and make increases if needed
  • Evaluate your business’s cost of goods sold
  • Access your existing clients
  • Manage your inventory more efficiently 
  • Increase the output of your existing staff

Business software like Cedar Pest could help you gain a better scope of which aspects of your business need improvement.

Outdated Facilities and Equipment

Is your transport fleet in constant need of repair? Is there rust on most of your tools? Are your employees using analog methods and collecting checks? If so, your business may need a little update to increase company value. 

Buyers are looking to acquire businesses that have it all figured out. They don’t want to obtain a company that is going to require a lot of investment to bolster returns. 

Before putting your business on the market, consider:

  • Updating tools and equipment
  • Updating employee uniforms and vehicle wraps
  • Marketing your company through social media
  • Streamlining the way your company operates with new software

Ditch the analog systems and increase your pest control company’s value with Cedar Pest software. We have simplified the way pest control businesses operate with innovative technology that allows you to handle nearly all operations from one point. 

With Cedar Pest software, you can:

  • Process payments
  • Interact with customers
  • Schedule appointments
  • Establish and coordinate routes
  • Oversee sales and reports
  • Receive automatic notifications on your mobile device

Ready To Sell? Enhance the Value of Your Company With Cedar Pest Software

Maybe you’re ready to cash in your business and retire, or maybe you’re still in the stages of daydreaming. Whatever your business plans are, you shouldn’t have to spend so much time and effort wading through papers and out-of-date tech.

For so long pest control companies had no choice in optimization software, until now. 

Cedar Pest was founded by field services experts and technologists who have an in-depth understanding of this unique industry. 

Your company is valuable to your community, and our company exists to support you while your business guarantees the safety of public health and infrastructure. By providing pest control software that creates a “digital ecosystem,” we allow our consumers to streamline operations to save time and effort. 

Let us help you automate your business and increase its value. Request a demo today.

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