Multiples for pest control business

March 20, 2024

by a searcher from Boston College in Denver, CO, USA

Hello - I am currently looking at a pest control business. Has anyone bought or diligence a similar industry? Curious on multiple ranges in this industry. Buyer is looking for 4x. Business is ~$1m in SDE.

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Reply by a searcher
from Harvard University in Washington, DC, USA

I didn't look at this size range but 4x at $1M SDE seems great - would lock it up if you can - assuming it's in ok shape w/ some recurring revenue, reasonable churn and pricing, and is a fit for you personally. Market is consolidating quickly w/ major PE and strategic consolidators buying at that size and above. Potomac (see https://www.potomacpestcontrol.com/blog-categories/commentary) has a lot of content and commentary on valuations for larger sized M&A deals (>3x revenue) - very frothy and has been for a while. He'll say that acquiring large pest control companies is not a game for searchers or multiple-oriented PE shops.

Reply by a lender
in United States

Hi ^redacted‌ -- Over the last few years I have financed a couple SMB pest control acquisition deals for buyers. Multiples varied but were close based on several factors, including the size of the business, its geographic location, customer base diversity, service offerings, and overall market conditions. For SMBs in the pest control industry, the EBITDA multiples usually range at 4x. However, for businesses with strong recurring revenue models, a clear competitive advantage, or a significant market share, the multiple could be higher pushing up to 6x.

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