[PCT Exclusive] Albert Cantu Leads New Pest Control Venture

In February, it was announced that former ServiceMaster executive Albert Cantu joined the private equity investment firm, Waud Capital Partners (WCP), as an executive partner. In this role, Cantu will lead WCP’s investment strategy in the consumer services sector — which will include a pest control division.

During his 20 years at ServiceMaster, Cantu was ServiceMaster Group Business President, managing American Residential Services, Merry Maids, ServiceMaster Clean and FurnitureMedic. He also served six years as president and chief operating officer of Terminix. He left the company in 2005.

“Our vision is to identify and acquire platform companies in the consumer services sector and then to build within those industries,” Cantu said. “We see a tremendous opportunity in the market and feel very confident about our business strategy. In particular, we will focus on the industries that I know best from my experience, such as pest control, lawn care, plumbing, heating and cooling, home warranties, maid service and other home service industries.”

Reeve Waud, founder and managing partner, said there is a tremendous opportunity for WCP to develop a portfolio of high-performing consumer services companies, and Cantu was a natural choice to lead this new venture. “Albert is an industry pro. His 20 years of experience at all levels of the service industry will provide invaluable insight for our firm as we move to develop strong companies,” Waud said.

PCT’s Brad Harbison recently spoke with Cantu about this new venture.

PCT: How did this opportunity come about?

Albert Cantu: Waud is a very well-respected private equity firm that’s been around quite a while. They have an excellent track record in building businesses and being long-term partners in the industries they participate in. The evolution of the strategy we have was really a collaborative effort. We both believe that there are great opportunities (in the service sector). We met through mutual acquaintances after I left ServiceMaster.

PCT: What can you tell us about Waud?
 
AC: If you look at their history, what impresses me is their ability to be responsible owners, if you will. By that, I mean they enter into a business or an industry with the intent of creating value — not only for their investors — but for the firm they acquire and its employees. It clearly is more of a partnership with the companies that they invest in. The goal is to create value for everyone involved as opposed to approaching it as if it were strictly a financial play. That type of approach is very important, particularly in a service business because it is a people business. The service is only as good as the people providing it. If your associates don’t perceive their company as a great place to work, or that management doesn’t care about them as individuals, the job they are doing and about customers in general, then that is going to manifest itself in the type of service they are delivering.

PCT: Do you expect the new company’s headquarters to be in Memphis? Why is Memphis a good location?

AC: As we build out this initiative and fulfill the vision and strategy we will continue to build out the management team in Memphis. (The management team) will provide strategic and operational oversight to these companies. I think that geographically Memphis makes a lot of sense. You can get to just about anywhere in the country pretty easily. In addition, there’s an excellent executive talent pool in Memphis from which we can draw as we continue to develop this initiative.

PCT: What will be your primary growth strategy?

AC: The growth strategy is to acquire companies on a regional basis and to continue to build on the strength of their brands. Many companies have been in business for years and consequently have built a lot of customer good will and brand equity. It is our intent to build on all of the attributes that have made those companies great. So we’ll continue to grow the companies organically, as well as through acquisitions.

PCT: In terms of acquisitions, what will your company look for in potential partners?

AC: The thought is to approach this from a regional perspective and build out each region of the country using the strength of the brands that we acquire in each of those regions.

PCT: How important is pest control to this new sector?

AC: I think that clearly pest control is a very solid, strong industry. The business model is time-tested. It is an industry that provides a great service to this country. It just has a tremendous amount of good, solid business people in it. I’ve had the pleasure of being involved in this industry the last 20 years and have met many great people in it. We anticipate being able to help these firms generate additional value for their respective stakeholders. Waud intends to be a long-term and a responsible participant in all the industries we enter into. It’s a track record we have and, quite frankly, one of the things I think will contribute to a great partnership between us.

PCT: What is the strategy for growing nationally in terms of geographic expansion?

AC: There’s not one area of the country we are targeting. It’s going to be on a case-by-case basis. As each of these industries presents opportunities to us, we will work hard to capitalize on that opportunity. We intend to be a strong member and participant in the pest control community. Like I said before it is a great industry and something I have been around all my life. I know of no better industry to try to be a part of.

PCT: Do you feel there is room for another major player?

AC: Absolutely. In this marketplace there are a tremendous amount of successful companies out there. Even with that there is just so much opportunity out there for everyone. Looking back at my days with Terminix, with all the independent market studies and analyses that we did, one theme rang true over and over: the market is ripe for opportunity for everyone. The more pest control companies there are providing quality services and great career opportunities will only serve to expand the market.

PCT: From an operation standpoint, will the pest control division operate under one brand name like Orkin and Terminix?

AC: No. While tucking in acquisitions has been successful for Orkin and Terminix, this strategy is different. We envision partnering with strong regional companies and continuing to build on the brand equity and the customer good will that has been created over the years. The continued existence of the regional brand is key to successful execution. We want to enhance those respective brands individually and grow those businesses both organically and through smaller tuck-in acquisitions.

PCT: Will this model give you the ability go after national accounts?

AC: I think as we get national in scope and our footprint increases that certainly enhances that possibility.

PCT: What type of a timeline are you looking at? For example, with the pest control division, where do you see it in one, five and 10 years.

AC: That’s a very difficult question. Clearly we will be ready to examine any and all opportunities that present themselves within the pest control industry. It’s an industry we feel very strongly about. We believe there is a lot of opportunity to create value for the companies in the industry and the industry as a whole. We are going to be patient participants in the industry and we’ll make decisions and acquisitions based on sound financial and strategic information.

PCT: How do you feel your personal successes at ServiceMaster and Terminix will benefit you in this new position?

AC: Suffice it to say my 20 years in the pest control industry with Terminix and running multi units of ServiceMaster will be beneficial. Knowing what is important to potential partners is very important in my view. More than anything it enhances my belief that they are great industries to be in.

The author is Internet editor of PCT.

About Waud Capital Partners

Waud Capital Partners (WCP) is a private equity investment firm founded in 1993 with more than $450 million of capital under management. WCP partners with management teams to invest in middle market buyouts, recapitalizations, industry consolidations and growth equity investments. The firm seeks to invest $10 million to $50 million in private companies in the following four areas: business and consumer services, healthcare services, industrial/specialty distribution and value-added manufacturing. Typically, the companies in which WCP invests have enterprise values between $30 million and $250 million. Since its founding, Waud Capital Partners has successfully made more than seventy-five investments in a wide range of industries, including adhesives, air and water treatment, alarm monitoring, automotive components, coatings, consumer products, home healthcare services, hospitals, lighting, litigation services, medical distribution, petroleum distribution, pharmaceuticals, publishing, sealants, specialty hospitals and tax consulting. Waud Capital oversees portfolio companies with combined revenues exceeding $4 billion.

Hear more from Cantu

Cantu provides additional insights into this venture in a PCT Podcast with Internet Editor Brad Harbison.