So you’ve found a pest control company you want to buy, and the owner is actually interested in talking. Now what?
This is where a lot of people get stuck. They know they want to acquire, but they don’t know the actual process from that first conversation to closing the deal.
I’ve walked through this process several times while building Pest Badger to over $10 million a year. Some deals closed in three months. Some took a year. Some fell through completely.
Let me walk you through exactly what happens from A to Z when you’re buying a pest control company.
The First Meeting: It's About More Than Numbers
When I find someone who’s actually interested in selling, the first thing I do is sit down with them personally. I do this myself, not through a lawyer or broker.
Here’s what I want to know:
What are their goals after they retire? What do they want to do for fun? What are they going to do without this business in their hands? What will they do with the money? What are they going to invest in?
I want to get them thinking. Get them excited about getting rid of this thing they’ve had for 10, 20, maybe 30 years.
At the same time, I want them to get to know me. I share my plan for the company, my vision for it. I make sure they feel comfortable with who they’re sitting down with.
This relationship piece matters more than most people think.
Assemble Your Team First
Before you go any further, you need two people on your side:
A business attorney: Not just any attorney. You need someone who specializes in business transactions and acquisitions. They need to know this specific type of deal.
An accountant or CFO: Again, not just some random accountant. You need someone who’s really good at financials and does acquisitions specifically. They need to understand the nuances of pest control and our industry.
These two people are critical. Don’t skip this step.
The NDA and Initial Documentation
Once we’ve had that initial conversation and things look promising, I send over a non-disclosure agreement (NDA).
Does it really protect you? Not completely. But it makes them feel comfortable that you’re not going to talk about anything, and they’re not going to talk about anything either.
Without an NDA signed, they’re probably not going to want to send you their financials. So get it done.
What Documents Do You Need?
I have a pretty extensive checklist of everything we ask for. Here’s what you need:
Financial records: Profit and loss statements for the last three years, business tax returns for the last few years, personal tax returns.
Licensing and insurance: Make sure their company is licensed. Make sure they’re insured. Get copies of everything.
Vehicle information: Pictures and registrations and VIN numbers of all their vehicles. You’ll want to see their trucks and equipment in person too, but get the documentation first.
CRM access: You need logins to their CRM. You want to see their actual clients. Are they 80% recurring and 20% one-time? Or are they 80% one-time and 20% recurring? This data matters.
Banking information: Profit and loss is one thing, but how much money is actually in the bank?
It’s basically a checklist of everything in the business. We help them go through it if they need help, and then they send over all that data.
Analyzing the Data: What to Look For
Once we have all the financials, I send them to my team to look through everything. We’re trying to figure out what our offer should be.
And here’s where we tie it back to those long-term goals we talked about in that first meeting.
Red Flags That Make Me Nervous
Lots of AR (accounts receivable): Maybe they’re not really good at their billing. Maybe customers owe them money and checks are still coming in. It’s not the end of the world. It’s something you can fix. But it’s a red flag.
No profit: Obviously, if they’re not making any money, that’s a red flag you don’t want.
All one-time customers: If their entire customer base is one-time services, does it fit your model? Is it something you really want to get into?
Customer demographics: Is their customer base older or younger? Where are they at? I’ll actually go call some of those customers, check in on them, see how they’re doing. I’ll go watch some services being performed.
There’s a lot of things you can dig into here.
The Letter of Intent
Once we’ve looked at the financials and we know what we want to offer, we send a letter of intent.
This is where things start to get real.
The Final Month: When Things Get Tense
The last month or so before a deal closes? This is usually when things get a little tense.
This is kind of where I let my team take over. I’ve built the relationship, but now it’s really about the numbers. My attorney and accountant, the people who are really good at this type of thing, they make the deal happen for you.
Here’s the thing: it’s not their money. So they have to be tighter with it than you would be with your own money.
These people who are really good at negotiating, this is their job. I wouldn’t say they beat the seller up, but they show them the flaws in the company. Those can be tough conversations. I’m in on them too, but these guys are the experts.
Building the Financial Plan
We’re putting together a financial plan for what the offer is going to look like and what the payment structure is going to look like.
There might be add-backs from the owner’s pay. There are a bunch of different models we have to go through to get a proper valuation of the company.
And here’s the truth: most companies are overvalued. People think they’re worth a lot more than they actually are.
They’ve had this business for 20 or 30 years. It’s tough. I get it. But it doesn’t change the math.
Key Metrics That Determine Value
Let me walk you through all the things we’re evaluating during due diligence:
EBITDA Margins
What’s the profit margin? This is huge. The better the EBITDA, the better your valuation, because that’s ultimately what you’re buying.
Revenue Growth
What does their revenue growth look like over the past year? Last three years? Are they still growing? Is there room to grow? If they haven’t been growing, why not?
Retention Rates
This is a really big one. What’s the retention look like year to year? Is it 80% or greater?
I think the average is about 20% customer turn. So if they’re at 80% retention, that’s a good spot.
And you want to have a retention clawback in your payment structure. If all these customers leave because the owner’s gone, can you get some of that money back? You absolutely want this protection.
Key Man Risk
Let’s say they have a branch manager and the whole company relies on this person. Is he going to want to stay? Could you lose him?
This is key man risk, and it’s a big deal.
Key Client Risk
Is the whole company based around five or six clients? Maybe one client is worth $100,000, another is worth $100,000, another is worth $100,000. That’s $300,000 from three clients, and they’re only doing $600,000 in total revenue.
If you lost those three clients, the company would be cut in half. That’s key client risk, and you’ve got to think about it.
Single Channel Risk
Are they getting all their work from one referral source? From one Facebook ad campaign? If that one thing dried up, would the leads be gone?
That’s single channel risk.
Market Risk
Is there potential for a bigger company to come into their market and start knocking on doors? Is the market still growing, or is it shrinking?
Technology and Systems
Do they have a CRM? That’s a good one. Is it easy to do payroll? Is it easy to manage? Would it be easy to integrate them into your software?
Branding and Assets
Has the brand been in the market for a long time? Does it carry any weight? Is their website worth anything? Is their name worth anything?
Are you going to rebrand? What does that structure look like? Is it worth rebranding?
And what about their vehicles? Do they need to get upgraded because they’re all from 2000 and have 200,000 miles on them?
You’ve got to think about all these things. Is it going to take another $200,000 in cash to replace all the vehicles? That affects your offer.
Why Deals Fall Through
Sometimes, you just can’t get there.
Usually it comes down to negotiations. You don’t want to pay over a certain price, and they’re not willing to budge. Sometimes you just have to walk away.
I had a big deal that I was super excited about, and we just couldn’t get there. You don’t want to offend them. It’s hard, because even though the company was big, he was overvalued and no one would have paid what he was asking.
Now, there are PE companies that pay big multiples. Companies like Orkin and TruGreen will pay a premium for a premium company. But most deals aren’t like that.
There are a lot of nuances, and sometimes the numbers just don’t work.
How Long Does This Take?
Every deal is different.
I’ve had deals close in three months. I’ve had deals close in six months. I’ve had deals close in a year.
I have friends who’ve been under letters of intent for a year and a half. When a private equity firm comes in, they might bring an entire team to sit next to your team and do a deep dive into everything about your business. They might spend six months on it.
The size of the company matters. The complexity matters. The seller’s timeline matters.
So don’t expect a standard timeline. Just expect it to take as long as it takes.
All the Metrics Matter
People ask me: “What’s the top one, two, or three things that matter most?”
The truth? All the metrics matter.
EBITDA is obviously critical because that’s what drives valuation. But branding matters. Systems matter. Customer retention matters. Growth potential matters. Risk factors matter.
You can’t just look at one thing. You have to look at everything.
Final Thoughts
Buying a pest control company is one of the fastest ways to grow. But it’s also one of the most complex.
You need the right team. You need to do your due diligence. You need to be willing to walk away if the numbers don’t work.
And most importantly, you need to build a real relationship with the seller. This isn’t just a transaction. It’s someone’s life work you’re buying.
If you’re serious about growing your pest control business through acquisition or organic growth, join our free Facebook group, Pest Control Millionaires. We’ve got over 2,000 active members sharing strategies that actually work. And grab a copy of Zip Code Kings to learn the marketing strategies that can help you scale to seven figures and beyond.
Now go out there and find your next deal.
