Selling your Pest Management Business? What makes us Different than the other Business Brokerage and intermediary firms?
It’s our approach:
We are CPA’s & MBA’s. We understand that it’s not necessarily the highest price that yields the most money. It’s the effectiveness of the tax minimization strategies that yields the most money for sellers. Our Merger and Acquisition team has collectively transacted several billion dollars in deal flow over the past several years making sure that our clients are well represented considering:
Non-Disclosures
Letters of Intent
Due Diligence
Other aspects of the deal
M&A information/ acquisition questionnaires
Financing
Reviewing Purchase and Sale Agreements
We consider the management issues such as:
How will your valued employees be treated?
Does the Buyer get a reduction in price if they experience attrition after the sale?
Who is responsible for company debt?
How will your customers be treated?
What happens to your accounts receivable?
Other Financial and operational Issues
It’s an integrated approach that considers your needs as well as how to best structure a deal from a financial, tax and legal structure that best meets your objectives. As a seller you need a team who is there to guide you. Our approach focuses on maximizing the value of your company by bringing you multiple potential buyers.
Step 1
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NDA
A business owner exploring the potential sale of their business through a broker should protect their confidential information by having a Non-Disclosure Agreement (“NDA”) put in place with the broker.
Step 2
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Engagement Letter
When you decide to forge ahead, you’ll sign a standard Engagement Letter (“EL”) to retain our services. The EL lays out all duties we undertake on your behalf as well as our compensation for a successful transaction, which Success Fee (“SF”) is a percentage of the sale price. There will be a non-refundable retainer deposit due upon execution of the EL which deposit will be applied as a credit towards our SF when the deal is closed. We will be paid directly at Closing for our SF net of the retainer deposit already paid.
Step 3
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Financials & Services Review
Once formally engaged, we then delve into your financials and services (access to software systems being key) and other non-electronic records to dissect the company, learn about its strengths, its problems, composition of the labor force, customer base (commercial, residential, government), geographic footprint of customers, number of routes, number of technicians, etc.
Step 4
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Deep Dive Questionnaire
As part of our business analysis you’ll also complete a “Deep Dive Questionnaire” which examines those details that buyers want to know about such as core business operations and policies. This is also a good time to discuss your specific goals and objectives to be sought in any contemplated transaction.
Step 5
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The Board Book
After we immerse ourselves in your business details and understand your objectives, we construct a Confidential Business Memorandum (“CBM”), commonly called the “Board Book”. This is the key marketing and executive summary that is provided to potential buyers once they have executed a Confidentiality and Nondisclosure Agreement. This document showcases your business to potential buyers.
Step 6
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Going to Market
Once we choose (with your approval) potential buyers and deliver the Board Book, we field questions from these potential buyers about your business and solicit information as to the prospect’s specific resources and expansion strategies and how we could “fit” into their key plans. Service companies with recurring-based sales channels (monthlies, bi-monthlies, quarterlies) fetch a premium price whereas one-shot projects, lawn care, rodent removal, bed bugs, and fumigations garner lesser interest in terms of an offer price…it’s all about efficient technician routing and steady cashflows known at the beginning of each season.
Step 7
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Short Listed Buyers
Once the field of interested and qualified buyers is narrowed, we solicit the prospect(s) to provide a Letter of Intent (“LOI”) which contains the material terms of the offer being proposed. We review the LOI with you and determine if the offer meets your expectations. As there may be more than one offer to evaluate, we provide our views on the relative benefits and disadvantages of the competing offers and which offer stands out from the rest. We then make edits to the proposed LOIs before returning them to the prospective buyers in an effort to “sweeten the deal” in terms of price, terms and/or legal stipulations.
Step 8
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Signed Letter of Intent
Once the LOI is signed, the buyer’s Due Diligence phase begins. This is done electronically using a data vault that contains important records that a buyer requests while conducting this diligence phase (usually between 1-4 weeks). To speed things along we start assembling a great deal of the information while working on the Board Book, as we know what will be sought and therefore, we can streamline the diligence process.
Step 9
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Due Diligence
Due Diligence is the process whereby the purchaser is able to confirm what is represented in the Board Book as to your company makeup, finances, operations, integrity of management as well as if the buyer wants to move forward with the transaction. The process is grueling and entails gathering tax records, corporate governance documents, policy and procedures along with payroll and banking records. We prepare the data vault with the document requests and sit with you and represent you during the process. Our background as CPAs and auditors give us insight into what is being asked and why so you can feel confident that we will get you through the process successfully.
Step 10
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Purchase Agreement & Disclosure Statements
Once due diligence is completed, a buyer will draft the definitive contract – usually an Asset Purchase Agreement or APA (stock deals are uncommon although possible). When we receive the draft, we review, comment and edit it on your behalf even though we are acting as your broker and not engaged as your attorney. However, we work with your local attorney and CPA to help in their own review, as we have very broad industry experience understanding what a contract for the sale of a pest control company should or should not contain in terms of tax planning and legalities. The large buyers have distinctive APAs with very different clauses, so as the seller you need to be careful, especially regarding indemnities, representations, warranties and covenants. The devil is always in the details!
The APA refers to Disclosure Schedules which are details drawn from the due diligence phase and may be a list of assets purchased, assets excluded from purchase, liabilities assumed, liabilities not being assumed. Also included is a list of employees and their compensation details, a customer list, a list of insurance policies, claims and lawsuits, A/R and A/P aging reports, a list of phone numbers, websites and social media platforms, a list of prepaid customer accounts, a list of vehicles, as well as any permits and licenses, etc. We assist you and your attorney and CPA in finalizing these Schedules. Much of the information comes from the electronic data vault but repackaged for purposes of the contract presentation.
Step 11
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Other Contract Exhibits
As part of the APA there are several ancillary agreements as Exhibits to the APA (e.g., employment and independent contractor agreements, bill of sale, assignment and assumption agreements, noncompete agreements, promissory notes, etc).
Step 12
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The Closing
Finally, the Closing Date for the transaction is scheduled and all contract documents signed and held in escrow until funds are delivered via bank wire. Sometimes the APA may get executed and deal closed on the same day, while other times the APA is signed first and then Closing occurs sometime thereafter if conditions have to be satisfied before a Closing can occur (e.g., financing approval, landlord consent, employee meeting, H/R issues). The Closing itself is usually a short 10-15 minute call with both parties on the phone to confirm all signatures and conditions are completed, and finally a “congrats” to all as the deal is done with receipt of funds confirmed by you!
