ServiceMaster will sell its ServiceMaster Brands (SMB) business to Roark Capital and change its name to Terminix at closing. The deal is expected to close in 30 to 60 days, making Terminix a pure pest control play, as the company chases the sky-high Rollins valuation.
SMB is a franchising operation with two primary segments:
• Restore – residential & commercial restoration services following fires, hurricanes, water pipe bursts, etc.; and
• Cleaning – janitorial and residential cleaning services.
ProServ, a close comparison and competitor to the Restore business, was sold to Blackstone in March 2019 for 16 times EBITDA. SMB fetched 17 times EBITDA.
What it means for the pest control industry and you:
• Terminix will use the proceeds for debt reduction and organic and strategic acquisitions.
• The company expects net proceeds of over $1.1 billion from the divestiture after paying approximately $420 million in taxes.
• While Terminix severely curtailed its M&A activity over the past several quarters, expect the firm to jump back in the game with two feet, looking for quality companies while paying competitive multiples.
If you’re interested in exiting at the highest after-tax value, please contact me at email@example.com or 973-300-0288.