Valuing a Pest Control Company
Pest control companies are among the most popular businesses in the United States! They are infamous among college-aged individuals. Many students sell pest control during their summers while they are not in school. “Summer Sales,” as it has become known, is extremely popular. Sales are a great way for college students to make a lot of money in a short period of time. Not only are pest control companies a lucrative opportunity for college students, but for owners, entrepreneurs, and investors. These individuals have an increasing interest in owning a pest control company. As pest control companies continue to grow in popularity, it is important to understand how to value a pest control company. When valuing a pest control company a business appraiser looks at key success factors that increase the value of a pest control company.
Knowing the fair market value is key to selling or buying a pest control company. Peak Business Valuation, business appraiser Utah, is here to help you understand how to value a pest control business!
Peak Business Valuation, business appraiser Utah, works with individuals every day that are looking to buy or sell a pest control business. There are many factors that impact the value of a pest control company. That’s why it’s always best to obtain a business valuation from a certified appraiser. As part of a valuation engagement, we will discuss some of the key factors used in valuing pest control companies. The factors below are only a general reference guide. For more specific information about valuing a pest control company, schedule your free consultation with Peak Business Valuation, business appraiser Utah.
Market Multiples for a Pest Control Company
- SDE Multiple Average: 2.34x – 2.90x
- EBITDA Multiple Average: 3.26 – 4.07x
- REV Multiple Average: 0.85x – 1.06x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
Valuing a Pest Control Company
Generally, a cash flow multiple is the most appropriate multiple to use when valuing a pest control company. However, many companies in the pest control industry have increasingly similar cost structures. As such, a revenue multiple is becoming more applicable. Speak with a professional, like Peak Business Valuation, to see what multiples are most applicable to your business.
As you continue to learn more about what your pest control business is worth, you can start making changes to increase its value. This is helpful whether you are expanding your current pest control company or acquiring a new pest control company. Slight changes can maximize the value of your pest control company before selling it. If you are searching for a business valuation, schedule a free consultation call with Peak Business Valuation.
Key Success Factors
Peak Business Valuation values pest control companies on a regular basis. Below are several success factors that can help distinguish your pest control company and increase its value. For additional information, see Valuing Your Pest Control Business, Valuation Multiples for a Pest Control Business, Value Drivers for a Pest Control Company, and How to Value a Pest Control Company.
Recurring Revenue
Businesses with a recurring revenue model are one of the most attractive businesses for prospective buyers. A pest control company with annual contracts will be worth more than a company that does not have annual contracts. The reason for this is that buyers are willing to pay a premium for a recurring revenue model. This model allows the buyer to focus on new business opportunities, without worrying about losing existing customers. As such, these repeat customers are extremely lucrative. If your pest control company is not currently using a recurring revenue model, you should consider changing the operations. Doing so can increase the value of your pest control business!
Company Characteristics
Is the Company a franchise pest control company? Some popular examples include BedBug Chasers, Mosquito Squad, Eco Safe Pest Control, and PestMaster Services. Is the Company not a franchise but a local, independent pest control company? What is the local competition like in your geographic area? These are some of the questions we will discuss with you when performing a business valuation for a pest control company. The industry is fragmented and is highly competitive. The top four companies in the industry only account for 31.1% of total industry revenue. As such, there are opportunities for pest control companies of all sizes to become the dominant player in your local area.
Product/Service Mix
Most pest control companies only focus on servicing customers. They will come to their customer’s home a certain number of times per month and spray the outside of the home with pesticides. Some companies also do indoor spray as well. Companies that sell additional or unique services will attract more customers and increase their revenue. The increased revenue will raise the value of your pest control company. Additionally, if a company sells pest control products as well, this can be a lucrative part of a pest control business. The additional sales from these products can help provide another revenue stream for the company. Your product and service mix is important. Consider adding some unique services or products to your business to increase the value of your pest control company.
Summary
There are many important aspects to take into consideration when valuing a pest control company. Understanding the value of a pest control company is essential whether you are looking to buy, sell, or grow your business. Obtaining a business valuation can help you understand the fair market value of a pest control company. Additionally, a business valuation can help you to identify opportunities to maximize the value of your pest control business.
Peak Business Valuation, business appraiser Utah, values pest control companies across the country. We work with business owners and seekers just like you! Peak is happy to answer any questions you may have about understanding the value of a pest control company. You can reach out by scheduling your free consultation below.
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