BUSINESS | PPC113 November 2023

Henry Mott is a seasoned veteran in the pest management industry. With a career spanning over 30 years, he has held many senior positions in national companies, as well as owning and managing his private business for 17 years.

In his current role as Mergers and Acquisition Director for Vergo UK, he has effectively managed and supported numerous business owners in taking that huge step of deciding to sell their business.

Quick tips for selling a pest control company

Stay informed
Keep abreast of market trends in the UK’s pest control sector.

Network
Attend industry events to meet potential buyers and brokers.

Be transparent
Open communication with potential buyers can expedite the sales process.

Remember
The sale of your business isn’t just a financial transaction. It’s a culmination of your passion, dedication and hard work. Approach it with the seriousness and attention it deserves.

As the owner of a pest control company in the UK, you’ve likely invested significant time, money, and energy into building and growing your business. But there comes a point when you may consider selling your venture, in order to retire, change career paths, or seize new opportunities.

Whatever your reasons, selling your company is a significant decision that requires careful planning and a clear understanding of the market.

This article delves into the process of selling up, drawing from the experiences of numerous business owners who have been through the process already and seeking to take a potential seller through the basic steps of the process.

Making an informed choice

Knowing when it’s time to sell your company is a deeply personal choice. For some, it’s about finally cashing in on years of hard work, while others just want a fresh challenge. 

To make a smart decision, you should gauge the market conditions and your personal circumstances. If there’s a strong demand for pest control businesses and your company is thriving, it might be an opportune time to sell.

Often, the value of your business will determine the decision to sell. In many cases the valuation will allow you to make those life changes that you have promised yourself.

Whether it is a villa in the south of France, a yacht in the Mediterranean, clearing your debts and having a quiet retirement, or a completely new venture, what is left after costs and taxation will no doubt be the key factor in whether you sell or not.

Selling yourself

Business valuations begin by understanding the worth of your company. Preparation is key before listing your business for sale, so take steps to maximise its appeal.

There are many avenues to explore regarding obtaining a valuation, but as is always the case, a business is ultimately only worth what someone is prepared to pay. I would always recommend producing a prospectus for your company.

Clearly, the document will not want to divulge ‘trade secrets’ about your company but consider it in the same manner that you might a house sale.

Think about any USPs your company may have, such as specialist services, existing growth opportunities, unique sectors you operate in, and so forth.

Include other relevant information such as staff numbers, regions you operate in, trading performance over the last three years, company history, and so on.

Remember, you will only sell your business once, and while buyers are always keen to acquire, don’t just rely on their enthusiasm to value your business: it’s a two-way street!

Are your books balanced?

Part of the process should include a ‘financial clean up’. Ensure your financial records are accurate and up-to-date, as potential buyers will scrutinise them closely. 

Work with your accountant, look through previous years, and understand the figures as well as possible. Have answers ready for any anomalies that may exist. You also need to understand ‘above-the-line’ and ‘below-the-line costs’.

Most buyers look at ‘earnings before interest and taxes’ (EBIT) or ‘earnings before interest, taxes, depreciations and amortisation’ (EBITDA), and use multiples to drive valuations.

If you own property that you operate from, consider if you want this to form part of the deal or if you’d rather explore other options that are available for you. Property can be one of the most challenging aspects from a legal perspective when selling your business, so have a plan ready for all eventualities.

Consider all of your equipment and assets. Repair or replace any outdated or malfunctioning equipment. A well-maintained fleet and updated tools can enhance your company’s value.

The goodwill that is generated from your customer base will be the majority of what the buyer is valuing and acquiring. Review client contracts; long-term contracts can be desirable to buyers as they guarantee future revenue. Companies will always value recurring revenue higher than one-off work when examining turnover.

“... a business is ultimately only worth what someone is prepared to pay.”

A business is only as good as the staff it employs. Good sellers and buyers will always put the staff and customers at the forefront of their decisions.

At what point you involve staff can, of course, be a delicate decision. Not involving key staff until the deal is done can be counterproductive for all parties, but equally, it can come with risk.

It may be that you will need to involve some key staff during the due diligence process, to obtain information that may not be readily available. It is almost always best to discuss the situation with them beforehand if you feel that the risk of them working it out for themselves is very likely.

The legalities and due diligence are, without a doubt, a stressful process, irrespective of how well-prepared you are beforehand. The buyer’s lawyers will understandably want to drill down into every detail, as they have a professional responsibility to their clients.

By their nature, lawyers are risk-averse and will require detailed paper trails on a whole host of areas that you may have never considered as you have progressed your business over many years. Being patient and cooperative is essential, and having a lawyer acting for you who is very familiar with buying and selling businesses is an absolute must. This is not an area where you should cut costs!

The right fit

Working with a buyer and feeling confident about their approach is essential for a smooth transition. Consequently, finding the right buyer can and should be as much about its approach to staff and customers as the valuation.

To protect your staff, make sure you have robust contracts in place with them and ensure that their roles are clearly defined.

Negotiating the deal is where the rubber meets the road. Understand beforehand what you’re willing to compromise on and where you draw the line. For instance, are you firm on your asking price, or is there wiggle room?

And what about payment terms? Will you accept staggered payments, or do you require a lump sum? And as part of the post-sale transition, what period would you expect to wait before receiving full payment?

Most good buyers will work with a client to find a path that suits them both and will be, within reason, flexible and have options available. One size does not necessarily fit all, and the true art of negotiation is compromise.

After finalising the sale, there’s typically a transition period where you hand over the reins to the new owner: this can range from a few weeks to several months. During this time, ensure the continuity of services and maintain client trust. This is where good relations with buyers and your own relationship with your employees are critical, and where having taken the correct steps from the beginning will pay off.

Finally, don’t forget about looking ahead. Consider your next stages once you’ve sold your business and plan for your future, whether it’s retirement, starting a new venture, or simply taking a break.

It may be that you can continue to work within the organisation that has acquired your business, but be aware that you will almost certainly have to adjust to having a boss, which may be a pretty hard pill to swallow after years of ownership!

The big final step

Selling a pest control company in the UK is a significant undertaking. However, with careful planning, expert advice, and a clear understanding of the process, you can ensure a successful sale that rewards you for your years of hard work.

Full disclosure

At Vergo, we’re always looking to acquire fantastic pest control businesses. For an informal and confidential chat about your options, please contact me directly.
henry.mott@vergo.uk 
07787 101 501