[Cover Story] Acquisitions a Key Component of Terminix’s Growth

In 2007, Terminix was once again a major player on the acquisition front, having made 41 acquisitions in 17 states.

“In the past four or five years, since we re-entered the acquisitions market, our strategy has remained really unchanged,” said Steve Howard, senior vice president and chief financial officer, Terminix. “The acquisition market is very important to us and we’ve made it a priority by setting aside capital and devoting personnel to that effort as well.”

Terminix’s acquisition activity in the early 2000s slowed dramatically because the company was focused on assimilating recent large acquisitions, specifically its largest franchise, Allied Bruce Terminix Companies, and Sears Termite & Pest Control. Since that time, however, the company has set aside more capital and devoted additional personnel to this area of operation, and Howard said the 41 acquisitions Terminix made in 2007 were on par with the company’s acquisition activity the past four to five years.

In terms of marketing itself as a buyer (to other PCOs), Terminix has mobilized its personnel to work more with associations at the local level to maintain contacts with various operators in its markets. “We feel this is a more routine, predictable pattern to keep our pipeline established throughout the year,” Howard said.

Howard believes Terminix is mobilized to take advantage of opportunities that might surface, but that the company will “do so in a rational way and in a fairly consistent way to what we have been doing the past couple years.”

In 2007, Terminix’s parent company, ServiceMaster, was acquired by an investment group led by Clayton, Dubilier & Rice (CD&R). This change has not disrupted Terminix’s acquisition strategy, according to Howard. In fact, “they have already enhanced some of the initiatives that we had in progress inside Terminix and ServiceMaster by streamlining the decision-making process,” Howard said. “So it allows us to move faster once we have an acquisition opportunity come about. Our whole approval process has been streamlined. We’re a much more nimble operation.” — Brad Harbison