Recently, I was visiting with a colleague from my days at Waste Management Inc. (WMI), reminiscing about a major industry roll-up of which we were a part. WMI had decided to create value for shareholders by acquiring and consolidating companies in the very fragmented pest control business, creating a new national player in the industry.
We were part of the 5-person acquisition team – four of us being owners of acquired pest control companies, plus a long-time WMI executive. In two years, this team directed the acquisition and consolidation of over 100 companies, resulting in a roll-up of about $100 million in annual revenue. The entire consolidation was eventually sold to Terminix (but that’s a story for another time).
My colleague and I were recounting our M&A successes and messes in light of the long accepted axiom that “most acquisitions fail to achieve their objective.” A recent Harvard Business Review article states, “…study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%.” During the Waste Management roll-up days, we did much, much better. As you might imagine, we learned a lot about acquiring, transitioning and consolidating businesses during those two years which I’ll summarize here:
The pest control business, like most service industries, is highly dependent on the caliber and training of the people in the business. The service technicians, customer service representatives and even the customer-facing accounting people are keys to customer satisfaction and retention. And yet they are often the most neglected part of a transition plan. What specifics should be considered in this area?
The importance of marketing due diligence and transition/integration planning cannot be emphasized enough. One way to make sure that all the bases are covered is to hire an outside expert with extensive (and successful) M&A experience to help guide you through the process.
I would appreciate your thoughts and feedback on this topic.