A presentation by Paul Giannamore on pest control company valuations and M&A activity. It examines the rise in pest control valuations (reportedly up over 300% over the preceding five years, per the video's promotional description), how global economic trends affect the industry, and expectations for future valuations and consolidation. Senior executives and former owners from major pest control companies (including Rentokil, Rollins, Anticimex, Terminix, and several independent and acquired firms) join the discussion to share perspectives on valuation and M&A. # Channel Identity Observations: Video `01a168c8-cc11-78eb-b509-0a98519202cf` ## Video Overview **Title:** "Supernova: M&A in the Late Stages of the Pest Control Consolidation Boom" A two-host webinar/event recording ("M&A Supernova") covering pest control M&A valuations, macroeconomic analysis, and interviews with acquirers and past sellers. This appears to be the ninth and final of nine regional live sessions delivered in a single week. --- ## Explicit Self-Description ### Hosts - Two named co-hosts introduce themselves: **"Hey, I'm Patrick. And I'm Paul."** - Paul is identified by a guest as **"Paul J. L. L. Arnold Moore"** (likely "Paul Giannamore") and later referenced as **"Paul Giammarco and the Potomac group."** - Patrick is identified as **"Patrick Baldwin is my co-host on the Boardroom Buzz"** — evidence of a related podcast/show. ### Firm Identity (Creator Claims) > "We're an M&A and valuation firm. That's all we do. And our main focus for the last 15 years has really been the structural pest control industry." - Claims global scope: **"We do this in Europe and Asia and the Middle East, Latin America, North America."** - Claims scale: **"Done billions of dollars in M&A transactions in the pest control space"** and **"Over 300 million in transaction volume"** in the last 9 months. - Claims specialization authority: **"I probably do more M&A transactions in the pest control space than anyone... we'll do more deals in one month than a lot of other advisors do in a year."** - Firm name evidence: **Potomac** (the "Potomac Pest Control Index," "Potomac Group"), website promoted at close: **potomacpest.com/connect**. - Founder backstory claim: bulge-bracket tech investment banking in the late '90s, private equity, then founding Potomac in 2003. - Office claims: recent move **"from Switzerland to Puerto Rico"**; main North America office in PR where client due diligence is conducted. --- ## Observable Presentation Patterns ### Intended Audience - **Pest control business owners considering a sale**, addressed directly and repeatedly: - "I wanted to be able to talk specifically to business owners in each region." - Closing call to action: "If you are going to attempt to sell in 2021... you've come to a fork in the road. Are you going to engage an advisor?" - **Attendee scale claim:** "there's almost a thousand people that show up for this thing" — and the hosts note "not everyone knows who we are," prompting the self-introduction. - Secondary audience: acquirers and industry executives (Terminix, Rollins, Rentokil, Anticimex, Certus, Cintas guests). ### Claimed Scope of Content - Regional M&A market analysis across **nine US regions**. - Valuation methodology and macro commentary (Fed policy, QE, Treasury yields, public-market comparables). - Live/taped interviews with acquirers (Terminix's Andrew Klein and Jay Brown; Rollins' Matt Whiting; Rentokil's Alex; Certus's Mike Givlin) and past sellers (Jim McKelvey, Paul Bergman, Tony, Kyle Rona, Shane Hoy). ### Demonstrated Format & Style - **Dual-host banter** with casual, profane register ("What the hell?", "batshit crazy," "shitty situation"). - **Testimonial-heavy structure:** multiple former clients vouch for Paul/Potomac, e.g., Jim McKelvey: **"They're the true pros"**; Andrew Klein: **"Do not try this on your own."** - **Case study segment** ("Project Beetle") used as a recurring teaching device; Patrick reacts with scripted enthusiasm ("I'm like a kid in a candy shop"). - **Urgency-driven close:** repeated "sound the alarm" framing that 2021 is the time to sell — *"now is realistically the time to do it"* — tied to tax and valuation-cycle claims. ### Related Content Ecosystem (Stated) - **"Boardroom Buzz"** podcast, co-hosted by Patrick and Paul, repeatedly referenced with specific episode numbers (e.g., Jim McKelvey on "episode 25"). - Prior presentations referenced, including a "COVID time period last year in 2020" series and an "unhinged presentation." --- ## Claims vs. Demonstrated Distinctions | Type | Evidence | |---|---| | **Creator claim** | Deal volume, global reach, "billions in transactions," ~1,000 attendees, acquirer relationships | | **Demonstrated** | Access to senior acquirer executives on-camera (Whiting at "Rollins corporate headquarters in Atlanta"); detailed transaction anecdotes with named clients; multi-regional event production capacity | | **Not independently verifiable** | Valuation predictions ("at least 2 billion globally"), macro thesis, characterization of acquirer sentiment from private meetings | --- ## Notable Presentation Choices - **Casual irreverence as a brand trait:** jokes about co-guests ("unemployed Kyle Rona and barely employed Bill Talen"), a running gag about telling Anticimex that Shane Hoy was Asian, and jabs at government fiscal policy ("AOC and Bernie Sanders effectively writing fiscal policy"). - **Service funnel visible in content:** the event functions partly as client acquisition — closing promotes potomacpest.com/connect, the Puerto Rico due-diligence offering ("Potomac fly our clients down on our dime"), and named partner firms (Withum/Corey Vargo, BKD). - **Consistency evidence:** Patrick states he's been Paul's advisee for 10 years and repeats Paul's messaging across "nine" sessions — a demonstrated long-term host relationship. # Delivery Observation: M&A Supernova (Potomac / Paul & Patrick) ## Overview The delivery is a **two-host webinar** (Paul as primary presenter, Patrick as co-host) interspersed with **pre-recorded testimonials** and **live guest Q&A segments**. Tone shifts markedly between segments: informal banter between hosts, casual storytelling from seller testimonials, and a more structured chart-driven lecture from Paul. ## Speaker & Tone ### Paul (Primary presenter) - **Conversational, macro-economics lecture style**: frequently pivots from pest control to Federal Reserve policy — *"since 1971, when the United States disassociated itself with gold, right? Nixon closed the gold window."* - **Self-deprecating and profane asides**: *"since I'm fantastic at pointing out the blatantly obvious is don't do presentations all day, drink water, and forget to go to the bathroom before you go live."* Also *"the batshit crazy mental valuation level."* - **Blunt evaluations of client decisions**, reported secondhand: *"You didn't mince words. You said that's stupid."* Paul's framing: *"Are you an idiot? You got a great business here. Grow it."* - **Politically charged digressions** with editorializing: *"we've got AOC and Bernie Sanders effectively writing fiscal policy"* and *"He loves to blow everyone else's money."* ### Patrick (Co-host) - Warm, appreciative framing: *"Patrick Baldwin is my co-host..." — Paul praising him; Patrick reciprocates: "You've been my advisor for 10 years."* - Uses **recognition language**: *"I can vouch for it. You've said it over and over again."* ### Testimonial speakers (David, Jim McKelvey, Tony, etc.) - **Folk, colloquial storytelling**: *"Hell, I was just a old country boy"* ... *"David's office was in the laundry room."* - Repetition as emphasis: *"The bugs were easy, the trucks were easy, the chemicals easy. Hell, the customers were easy. It's the employees, by far, that's the hardest part."* ## Recurring Phrases & Verbal Habits - **"At the end of the day"** — used repeatedly by Paul: *"at the end of the day, um Patrick, here in 2021, we've got transaction multiples at an all-time high."* - **"Told/said over and over" / repetition motif**: Patrick: *"space repetition, like you say things over and over... they finally click."* - **"You know"** — extremely high filler frequency across all live speakers. - **Rhetorical questions then answering them**: *"What does that mean? That means instead of being..."*; *"Was GameStop adequately priced...? No, it was not."* - **Case-study summoning ritual**: *"So, like a genie, can I summon Patrick?"* — Patrick: *"You say case study and I'm... There's supposed to be like confetti coming down."* (This appears to be an established bit.) ## Teaching Habits & Structure - **Chart-walkthrough method**: Paul narrates data slides directly: *"On the bottom of this chart, you'll see a blue shape... I guess I don't have a better word for it."* - **Numbered takeaways**: *"the first most important thing for you to know from this presentation..."*; *"Number two... Number three..."* - **Historical framing via bellwethers**: *"You start to look for bellwethers... there's not a better one in the pest control industry to look at than Rollins."* - **Explicit qualification of claims**: *"Now, I'm going to qualify something very quickly... this doesn't mean if you own a $2 million pest control business, you're going to go out and sell it for eight or nine million dollars tomorrow."* - **Repetition of a single core thesis**: late-stage market — *"we are at a height right now"*; *"very, very late in this, um, acquisition boom"*; *"we are effectively set up for a blow-off top."* - **Interactive ownership-check teaching**: Paul asks Patrick to read data he claims he can't see: *"because I'm an old man and can't see that screen, what sort of revenue and EBITDA was Project Beetle doing?"* —Patrick supplies the figures. (Could be a scripted device; uncertain whether genuine.) ## Guest Interview Patterns - **Standardized questions across regions** (implied and shown): *"one of the questions that we've received most this week"*; *"Valuations are at an all-time high. How high can they go?"* - **Effusive introductions**: *"I consider him a dear friend"* (used twice, for Paul and for Tony) — a recurring introduction formula. - **Playful insulting nicknames for guests**: *"unemployed Kyle Rona and barely employed Bill Talen"*; introducing guests as *"these two characters"*; *"David will be picking his nose over there."* Guests respond with laughter, suggesting an established rapport style. ## Uncertainty Notes - Repetition of the "sell now" urgency message is strong and consistent; the frequency of "you know" fillers is observable but not precisely countable from the transcript. - Whether Paul's "old man can't see the screen" line is a genuine limitation or a scripted device cannot be determined from the transcript alone. - The testimonial segments appear pre-recorded but the transcript does not explicitly confirm which segments were live vs. taped beyond Paul's *"I have yet to see this video."* # M&A Supernova — Position & Reasoning Record ## Overview Video: *"Supernova: M&A in the Late Stages of the Pest Control Consolidation Boom"* (id: 01a168c8-cc11-78eb-b509-0a98519202cf). Speakers identified in transcript: **Patrick** (co-host, "Patrick Baldwin," Boardroom Buzz co-host), **Paul** (Paul Giannamore, Potomac / "Paul J. L. Arnold Moore" as Patrick jokingly introduces him), plus guest segments with Terminix, Anticimex/Turner, Rentokil, Rollins, and Certus representatives, and seller testimonials (David, son unnamed, Jim McKelvey, Paul Bergman, Tony, Kyle Rona, Shane Hoy). ## Patrick's Positions ### Why nine regional sessions - **M&A and valuation are regional**: pest control is a local business; different acquirers acquire in different areas. (Patrick asks; Paul answers.) - Paul adds: giving each acquirer dedicated time avoided "an all-day affair." ### On Paul's value - Calls Paul generous, sincere, a "dear friend" whose opinion he bounces big decisions off. - "You've been my advisor for 10 years... spaced repetition... it finally sinks in." - Notes Paul repeatedly told sellers like Jim McKelvey and Shane Hoy "**not yet**" in past years — contrasting with the current "sell now" message. ## Paul's (Giannamore / Potomac) Positions ### Market timing — central thesis > "2021 is like an M&A supernova... at least a two billion M&A year... we're effectively set up for a blow-off top." - **Very late stage**: "I think we are at the highest point we have been from a valuation perspective in pest control... I think we're coming towards the end." - **"2021 is the first time ever... I'm telling everyone that if you are close to selling, now is realistically the time to do it."** - Qualifications preserved: - "Could valuations run longer? Sure." - "Timing, if I knew that... I'd be doing other things." - High multiples apply to **scarce/premium assets**, not blanket — "even though deals get done at 3.5 times revenue, I can point to at the very same time deals that are getting done at one times revenue." ### Reasoning: macro drivers - Post-1971 fiat monetary system, Fed suppression of business cycle, 40 years of financial repression, QE since 2008 has inflated asset prices. - QE mechanics: Fed swaps interest-bearing Treasuries for base money → "hot potato" chasing yield → bids up risky assets. - Pest control "trades like a bond" (citing Rollins: family-owned ~56%, small float, quarterly dividend); pest control index outpaced S&P 500 post-QE. - S&P 500 trading above 3x revenue (all-time high); some small pest control companies selling at premiums to the S&P 500 — cited as **dramatic mispricing**. - Debt concerns: twin deficits, debt-to-GDP 130%, Fed now owns more Treasuries than foreigners, monetization → inflation risk. - Corporate debt at $11.2T ("half the US economy"); Rentokil borrowing at ~50bps vs 5.25% ten years ago enables "levered carry trades." - Historical mean for private pest control: **"clearly without a doubt one times revenue, five to six times EBITDA."** Public peers historically 7–12x EBITDA (1.2–2.2x revenue); now re-rated to 15–25x. - Negative forward returns approaching: at 15–20x EBITDA "you're better off not buying the company"; acquirers can redeploy capital into sales/marketing for better returns. - Late-stage indicators: (1) implied low-single-digit returns, (2) private equity arriving late — "Private equity always comes to the party late" — 3–4 more PE firms entering by end of 2021, (3) rising capital gains tax risk under Biden. - Tax scenarios: at 20% cap gains, Project Beetle-like deal nets ~$8.7M; doubled taxes cost ~$1.7M; but the **worst** scenario is unchanged taxes with valuations reverting to mean (walk away with "a measly 3 million"). - Capacity constraint argument: 2020 deals pushed to Q4 (Potomac did 12 transactions in Q4; acquirers "shut the books"); 2021 pipelines three times larger than a year ago → sellers must act now, not wait for August/September. - Rollins multiple rolled over as 10-year yields rose Feb–Apr 2021 — growth-to-value rotation; pest control historically trades inversely to rates, though he thinks "that is going to break down." ### Case study: Project Beetle (2006) - $3.4M revenue, ~$800K adjusted EBITDA, 82% recurring revenue; sold for **$3.7M** in a duopoly market (Rollins/Terminix only serious bidders). - Imputed resale values: ~$3.5M (2004), ~$3.3M (financial crisis), **$10–11M** (June 2021) — demonstrating asset price inflation. Explicitly a "thought experiment," not actual repeat sales. ### Anecdote on brand/valuation - Recounts a PCT webinar where panelists said brand/advertising doesn't affect valuation; Paul privately messaged that it "has a ton to do with your brand" — this honesty won David's trust. ### Potomac positioning - Claims most pest control M&A of any advisor: "we'll do more deals in one month than a lot of other advisors do in a year"; ~$300M+ volume over last 9 months; 284 private transactions charted over 20 years (80/20 principle, outliers excluded). - Qualification: charts show high end; asset vs. stock deal structure matters. - Recommends engaging an advisor; brings in tax specialists (Cory Vargo/Wipfli, BKD) at Potomac's expense; new Puerto Rico office hosts due diligence (Potomac flies clients down "on our dime"). ## Guest Positions ### Terminix — Jay Brown & Andrew Klein - **Klein**: "Do not try this on your own" — advisors' value is "immense"; has been on both sides (sold Assured Environments; now acquirer). - **Brown**: acquired employees get benefits, 401k, and advancement opportunities (e.g., Andrew's associate promoted into a Connecticut branch management role). ### Jim McKelvey (sold to Anticimex, 2019) - Paul shepherded a three-brother partnership sale, "keeping everyone together" as interests diverged; praised Potomac's CIM/book quality; deal closed ~May 1 after March market launch. ### Paul Bergman (president, Viking; ex-American Pest) - **Counter-trend on multiples**: when "ridiculous multiples" hit, he pivots marketing dollars to **targeted digital marketing** to grow organically — "could I grow half a million, a million... absolutely" — an alternative to small acquisitions. ### Tony (Triple S) & Mike Schmidt (Anticimex/American) - Tony: sold October 2018; "an opportunity we didn't think would ever come around"; stayed 6 months to reassure staff, then left — was burning out after 30 years. - Schmidt: "it depends on the seller"; some (e.g., Bernie Cox) integrate well; high-quality assets keep premiums in a correction, but average businesses may revert from 2–3x toward **1x revenue**. "What matters more... is our post-transaction multiple." ### Anticimex / Turner — Bill Talen & Kyle Rona - Turner: Jacksonville-based, builder-program origins, expanding into Georgia; prioritizes employee investment then client experience. - Kyle Rona: wanted to buy the family business from his father but "it's worth way more than I could ever afford"; engaged Potomac in January, sold **May 3rd** — chose Anticimex/Turner for employee treatment and peer referrals. ### Rentokil — Alex (Kirk?) - Rentokil bought at 1.5x or below in 2006–2012 (including Western); "some businesses we don't want to buy at all at any price" — **quality isn't about size** (bought a $300K Oregon business); seeks well-paid techs, premium service/pricing; must be selective in "extremely competitive" market; lots of sellers taking advantage of high valuations. ### American Pest / Northwest — David Billingsley & Shane Hoy - Billingsley (from seller's family, earlier segment): sold 2018 after growing from 1993 laundry-room start; employees were "by far the hardest part"; now enjoys "not knowing what day it is." - Hoy: Paul told him in ~2015 that selling was "stupid" — he grew instead; became Anticimex's West Coast **platform acquisition** (Pro Pacific, 2019); "I want to have my cake and eat it too" — took chips off table while continuing to grow; stresses genuine care for employees. - Billingsley on capacity: acquirers have limited deal bandwidth; sellers should "get toward the front of the line" or risk being pushed to 2022. ### Rollins — Matt Whiting (VP Corp Dev) - **Counterpoint to Paul's pessimism**: "I think we're at the top. But I've been saying we're at the top for a couple of years... each year it seems to get a couple of points higher." - Public company valuations "function as a cap" on M&A; sees **moderation** in increases; "I don't necessarily see a downturn in valuation coming" — prices stable for a while. ### Certus — Mike Givlin - History: own bird-control business → Steritech (2007) → Rentokil (2015) → first Anticimex NA hire → founded Certus 2018; ~$72M revenue across 10 states. - Differentiators: **no synergistic layoffs**, easy transaction process, cultural fit; no minimum size — buys from one-man routes up. ## Unresolved Tensions (preserved) - **Top or not**: Paul says "batshit crazy" valuations late-cycle and mean reversion likely; Whiting sees stability, no downturn; Schmidt says quality assets hold premiums while average assets revert. - Paul admits his own directional tension: policy is "extremely bullish for risk assets" short-term yet "very, very late" in the boom. - Organic growth (Bergman's digital marketing) vs. acquisition as competing capital deployment. - Paul's timing uncertainty is explicitly stated throughout; his "sell now" advice is conditional on sellers' life stage — "no reason to rush out the door if you're growing your business." ## Noted but Unverified Claims Speaker assertions (transaction prices, multiples, macro statistics, guest histories) are recorded as expressed; the transcript provides no independent verification of figures such as $2–3B acquisition spend, the 284-transaction dataset, or Rollins ownership percentages. # Observation: Speaker Roles & Provenance — M&A Supernova ## Video - **Title:** Supernova: M&A in the Late Stages of the Pest Control Consolidation Boom - **Format:** Recorded live webinar (ninth of nine regional sessions), New England session, with pre-recorded interview segments ## Speakers & Roles ### Hosts / Co-Creators - **Paul (Paul Giammarco, Potomac Company)** — Co-host; M&A/valuation advisor, principal presenter of market analysis. Identified in transcript as "Paul," "Paul Giammarco and the Potomac group" (per Jim McKelvey), and "Paul J. L. Arnold Moore" (as introduced by Patrick). - **Patrick (Patrick Baldwin)** — Co-host/co-creator; co-host of "Boardroom Buzz"; conducts interview segments (Jim McKelvey, Matt Whiting). ### Guests — Acquirer Representatives | Speaker | Affiliation / Role | |---|---| | **Andrew Klein** | Terminix; formerly of Assured Environments, acquired by Terminix | | **Jay Brown** | Terminix | | **Mike Schmidt** | Anticimex/American Pest (M&A execution; Triple S deal) | | **Alex (last name not given)** | Rentokil North America; senior M&A professional since ~2005 | | **Bill Talen** | Turner Pest Control (Anticimex portfolio, Jacksonville FL) | | **Kyle Rona** | Turner Pest Control; recent seller (Fehi/business sold May 3rd) | | **David Billingsley** | American Pest (Anticimex portfolio, Maryland), president | | **Shane Hoy** | Pro Pacific / Anticimex West Coast platform seller; brother Ben mentioned | | **Matt Whiting** | Rollins, VP of Corporate Development (interviewed at Rollins HQ, Atlanta) | | **Mike Givlin** | Certus (PE-backed founder); formerly Steritech, Rentokil, Anticimex | ### Guests — Sellers / Case Study Participants (pre-recorded segments) - **Jim McKelvey** — JP McKelvey (NY Metro/CT), sold to Anticimex 2019; Boardroom Buzz episode 25 guest (video interview conducted by Patrick). - **Paul Bergman** — President of Viking (NJ, Anticimex portfolio); formerly American Pest. - **Tony** (last name not given) — Sold Triple S to American/Anticimex, October 2018. - **Unnamed father ("old country boy") and son ("David" referenced)** — Founders of a business started 1993 in a laundry room, bought 2007, sold 2018; 165 vehicles, 60,000 miles/week. Speakers not individually named. ### Mentioned, Non-Speaking - Corey Vargo (Withum/"Wiffle" accounting firm), tax expert, prior Buzz guest - Dylan Seals, Eric — production credits (thanked at close) - Michael Vigneault/Vinney (Anticimex), Bernie Cox (seller to American), Clark Keenan, Alan Brown, Andy Ransom (Rentokil), Joe Thomas (Arrow), others mentioned in historical deal discussion ## Referenced Sources & Data - **Charts/data presented by Paul:** S&P 500 price/revenue multiple; Rollins 20-year revenue multiple; "Potomac Pest Control Index" (internally weighted: Rollins, Rentokil, Terminix, Ecolab); scatter plot of 284 private market transactions over 20 years; 10-year Treasury vs. Rollins; US deficit/debt-to-GDP charts; acquisition spend history 2017–2021 - **Named transactions cited:** Rollins/PCO Services (Canada), Rentokil/J.C. Ehrlich, Rollins/Waltham Services, Rentokil/Western, Rentokil/Steritech (2.8x revenue), "Project Beetle" (Potomac's own 2006 deal) - **Publications referenced:** PCT and PMP trade articles; PCT-sponsored webinar (unnamed presenters) - **Third-party claims:** Paul attributes statements to senior executives at Rollins, Terminix, Rentokil, Anticimex, Certus ("valuations have gotten ridiculous," becoming more selective) — reported from private meetings, no named sources for most - **Forecast claims** (speaker's own): 2021 to be ≥$2B possibly $3B+ pest control M&A year; "blow-off top" warning ## Promotional Segments (Flagged) - **Potomac Company promotion:** Repeated positioning of Potomac's deal volume, exclusivity, and expertise; guests endorsing Paul's advisory services (Andrew Klein: "Do not try this on your own"; Jim McKelvey, Tony praising the process) - **Puerto Rico office promotion:** Invitation for clients to travel for due diligence, "on our dime" - **Call to action:** potomacpest.com/connect (delivered by Patrick) - **Boardroom Buzz cross-promotion:** Multiple references to episodes (25, Corey Vargo, Mike Stanzik) and upcoming format change/return late July - **BKD accounting firm endorsement:** "I can't recommend them enough" — promotional tone by Paul ## Provenance & Uncertainty Notes - Some guest last names and full identities **not stated in transcript** (Tony, Alex, David/son segment speakers) - One speaker introduces Paul with a garbled name ("Paul J. L. Arnold Moore"); correct surname appears later via Jim McKelvey - Transcript contains apparent mishearings ("Anti C Max"/"anti-Semitic"/"NTC Mex" for Anticimex; "Wiffle/Wifely" for Withum; "Fehi/Fahey" inconsistent) - **Comment availability:** Not stated in transcript or supplied metadata - Financial figures (multiples, deal values) are speaker assertions; no independent verification present in source Hey, I'm Patrick. And I'm Paul. Thank you for joining us for M&A Supernova. So Patrick, we just did nine regional presentations. It's been a long week. Nine regional Supernova presentations with a lot of great guests from all the acquirers in the industry. Paul, quick question before we get into this. Why did we decide to break it into nine different regions? Well, number one, M&A and valuation tends to be regional. You know, after all, pest control is a local business. Different acquirers are making different acquisitions in different areas of the country. So I wanted to be able to talk specifically to business owners in each region. Um almost as important though is I wanted to give each acquirer an opportunity to really spend some time with our guests today. And you know, having a individuals from Rollins and Rentokil and Cintas and Anticimex and Terminix, you know, it would have been an all-day affair. So in order to really break it up, we gave each acquirer a different region, had some great guests. Today we heard from Andrew Klein and Jay Brown from Terminix on our New England session. But what you guys are about to see is the primary presentation, which is very similar across all regions. And then you're going to get some highlights or effectively the best from each of our guest. Paul, I learned a lot this week just being part of Supernova. I appreciate you making time to do this. Without further ado, let's jump into Supernova. Let's do this, Patrick. I had a conversation with a company down here in Atlanta yesterday and I could pick it up from him thinking that, you know, this is this is as good as it gets right here where I'm at. You know, my business is doing good. It's growing like crazy. This is good as it gets. Well, I got news for you. It's not as good as it gets cuz he called me wanting my opinion how I liked where I'm at now and I tell him I said, "You know what I like about it best, David?" I said, "I like not knowing what day it is." Hell, I was just a old country boy. You know, I I was graduate high school, that was it. Man, we didn't know nothing about business or labor or HR, none of that stuff, man. We would just all we just we just done what we'd done our whole life. We do We never did business. We We'll take care of it. We'll figure it out. We started in '93. David's office was in the laundry room. We bought it in '07 and then we had it for ourselves for 11 years and we grew the hell out of it and and then sold out in 2018. There was definitely a couple of weeks where we're just like, "What is happening to our lives right now? We were We thought we were on this path, but now we're going on this different path." You know? But then the realization uh does kind of settle in on you that this thing that they built like out of our laundry room, it's their thing. It's the thing that they built. Once I started to sit back and evaluate the kinds of things that this business was taking away from Dad versus giving to him, once it got so big, then I really did start to question whether the path that we thought we were on was the right path. The bugs were easy, the trucks were easy, the chemicals easy. Hell, the customers were easy. It's the employees, by far, that's the hardest part. Just not having that headache to deal with every day and wondering what which one of those bombs is going to explode. I mean, we had 165 vehicles on the road traveling 60,000 miles a week. That's two and a half clips around the earth every week. The odds were just monstrous that we were going to have some kind of disaster. So, basically with all that in mind, I I came back to my office and said, "Guys, it's time for us to sail." This transition that he was about to make could really set him up for a bright future that has no worries cuz that's ultimately what everybody's working for, right? What are we working for if we're not trying to get to a place where we are like unencumbered with life. I enjoy going to my garage every day and just playing with the cars. I enjoy that a lot. It's almost like I'm meeting somebody new because I've only ever known in my adult life I only knew this dad, you know? And so, I really am meeting someone who is brand new. He's like unencumbered. He's relaxed. He's down for an adventure. He's got all this free time. He just wants to talk on the phone and there's nothing to talk about, you know? And all that stuff is the good stuff that you don't really know that you're missing on the flip side. PCT sponsored a webinar. There's these guys and I can't remember their names and and I'm sure they're good guys, but I asked a question. I said, "Does the advertising you do, your reputation that you've built, your brand, does that have anything to do with the valuation of your company?" The first answer out of their mouths was, "Heck, no. That don't have anything to do. It's all based on numbers." Paul sends me a private message and he goes, "That's It has a ton to do with your brand." I looked at David and I said, after I said, "That's our guy right there. That's our guy. Anybody that understands that nuance of the business, that's who we want. Honestly, what Dad has now is what people work for. It's just hard in that like last moment when you're ready to make that transition to finally just let this thing go that you've just poured yourself into. Devon and I will lay down at night and just think about what a great life we have. Now, I don't know if it could it could be any better. I want our kids and our grandkids to always see us work together, but I don't ever want them to forget how we started. Reach for your goals, you know, just don't accept a job. Don't accept a paycheck. I'd rather see you do something to where there's no limit. Paul would be good. From day one, just start asking questions. He's full of guidance. The good thing about Paul is here's a guy that knows what the acquirers are looking for and and knows, you know, what they want to see. You want to be around somebody that you can learn from. I've always told our people, everybody in our company, I said, "If you ever walk in the room and you think you're the smartest person there, then you're in the wrong damn room." Folks, I'd like for you to put all your assumptions aside because you made a great decision today by attending this meeting. Uh you're about to meet a person I consider him a dear friend now, and we uh we uh any big decision uh that I'm going to make, I'm going to bounce it off of him cuz I value his opinion greatly. But, put your assumptions aside right now, and and just know that that you made a great decision by being here today. Folks, let me introduce you to Paul J. L. Arnold Moore. I made the comment on a call one day a couple months ago. 2021 is like an M&A supernova. This will be the biggest year on record. I can tell by the pipelines, right? I can see what goes on behind the scenes. Takes everyone else months and months to read the PCT and PMP articles on these deals. There's no doubt in my mind that this will be at least a two billion M&A year. We're effectively set up for a blow-off top in this industry. There's a tremendous amount of capital that gets attracted to a small finite number of acquisition targets. Prices blow up to the top. All the returns are rung out, and then it collapses. Good afternoon, everyone. Welcome to M&A Supernova. Patrick, this is our last of nine live sessions this week and uh I'm super excited to be here on Friday afternoon. This is the New England session and we have some great guests today to talk about uh basically pest control M&A and all sorts of other stuff. I guess my first piece of advice for since I'm fantastic at pointing out the blatantly obvious is don't do presentations all day, drink water, and forget to go to the bathroom before you go live. That's number one. Number two, um Patrick Baldwin is my co-host on the Boardroom Buzz and there's no guy in this industry that's actually more generous with his time and more sincere about helping business owners actually improve their businesses. And you know, he convinced me to do the Boardroom Buzz which I was very hesitant to do. Uh but it was the middle of COVID and I thought, "What the hell? Um what am I going to spend all afternoon with my wife? I might as well go talk to Patrick and a bunch of pest control guys." So, I came out, we did the Buzz, and it has actually been um it's been a joy and we've had some great guests. And we've got Andrew Klein on here today um formerly of Assured Environments, now part of Terminix. I'm excited to get him on the Buzz at some point as well. But Patrick, you're giving me a you're giving me a summer break, aren't you? You get a few weeks and I still have not released relinquished control of your schedule cuz here we go, our nine Supernova presentations, going to do some travel, get on the road, change the change the show up a little bit, and uh keep you busy. That's right. So, when we come back in middle to late July, depending on who knows when the hell we'll be back, but I think it'll be by end of July. It's going to be a somewhat of a different show. We're going to do some really cool stuff with it. So, I'm super excited about that. Um I want to uh start this presentation. So we've This is the ninth one we've done. So I've learned things as we've gone on and made some mistakes. And one of the mistakes that I made is we've got a lot I mean, there's almost a thousand people that show up for this thing and um not everyone knows who we are. And so who are we? Well, we're an M&A and valuation firm. That's all we do. And our main focus for the last 15 years has really been the structural pest control industry. Um we do this around the world. Um I just actually recently moved from Switzerland to Puerto Rico, but we do this in Europe and Asia and the Middle East, Latin America, North America. Um Done billions of dollars in M&A transactions in the pest control space uh over the years. Um as all of you know, it's been particularly busy uh recently as valuations have continued to increase. So you know, over the last 9 months we've done I don't know how many transactions, but a lot. Over 300 million in transaction volume. And one of the things we're going to talk about today before we get the party started is where I think the market is going this year. And um you know, I think my only claim to fame here and the only reason why you should listen to me is I probably do more M&A transactions in the pest control space than anyone. I mean, we'll we'll do more deals in one month than a lot of other advisors do in a year. And that's because we focus on this. This is all we do. Valuation, M&A, and pest control. And when you look at the acquisition spend historically, you'll quickly realize that you know, 99% of acquisition dollars in the United States in the pest control industry are spent by just a small handful of companies. You've got Terminix and Rentokil, Rollins, Anticimex. You've got some other companies, some newcomers, Certus, um a private equity-backed business that Givlin started a few years ago. Um we've got Arrow Exterminators down in Georgia owned by Joe Thomas and Massey Services, of course, in Orlando as regional acquirers. But for the most part, you know, most of the money is dropped by the big players. Terminix, Anticimex, Rollins, um and Rentokil. And you know, a quick cursory glance of acquisition spend over the last few years, you'll see 2017 was actually a pretty decent year. We don't have 2016 data up there, but you can take a look at it. Um in 2017, all the acquirers were active. Um I guess Terminix didn't do a whole lot of spend in 2017, but in 2018 we saw a ramp up, you know, more money is being spent. Acquisition multiples continue to increase. 2019 was a blowout year, uh somewhat skewed by the Clark acquisition, but at the end of the day, right now that's the zenith. I truly believe 2020 would have been the largest year on record, um but of course COVID derailed that, right? So, here we are in 2021. I think we'll do at least 2 billion globally in pest control acquisition spend. Depending upon what happens in the second half of the year, we might be looking at at 3 billion plus. So, I think it will be a big year. Um we're going to talk about valuations in pest control today, but I you know, I think whenever you operate in an industry, a lot of folks tend to just focus on what's going on in the industry and and be somewhat sometimes oblivious to what goes on in the outside world. Um when I think about valuations, you know, first I'm focused on the global macro environment. So, what's going on globally with asset prices? And you know, really unless you've been living in a cave for the last few years, you'll realize that the globe, the world has gotten to be a far more interesting place, I guess, for a lot of reasons, but on the financial side, you know, since 1971, when the United States disassociated itself with gold, right? Nixon closed the gold window. The financial system really has become more and more unstable and the US Central Bank, the Federal Reserve, has continued to try to um suppress the business cycle, right? Smooth out the business cycle, keep everyone from feeling the pain of recessions and this is is actually made the whole system far more unstable. And over the last 40 years, we've had dramatic suppression of interest rates through financial repression from the central banks. Um but more acutely in the last 10 years since the global financial crisis, all of this monetary stimulus by governments around the world has propped up asset prices across the globe, but more acutely here in the United States. And after the financial crisis, the goal was really to create a wealth effect, right? We had a bust. Uh we go into a massive the Great Recession as it was called and the government wanted to stimulate spending. So, they increased the prices of assets artificially in order to make people feel wealthy. Um unfortunately, that didn't cause people to spend, but it certainly did inflate asset prices to the highest we've ever seen in history. So, here in the United States, asset prices publicly traded equities have now eclipsed the 1929 run-up to the Great Depression, blew past the um dot-com bust. And here we have it. And on this chart right now, you'll see the S&P 500, which is a broad-based US equity index. And it's a very descriptive index and it's a meaningful index. And in fact, um fund manager performance is based off of this index. Equity risk premiums. So, on and so forth, uh utilize this particular index. And this is a basically a price over revenue, so a revenue multiple index. And you know, throughout this presentation, we're going to talk a lot about transaction multiples, but um we have to keep in mind that multiples don't really drive deals, particularly sale Revenue doesn't drive deals. It's cash flow and it's the growth rate in free cash flow. That's what drives valuations. But what we see in this chart is the S&P 500 index is trading at three north of three times revenue. Um and I think this is interesting for a variety of reasons. First off, um it's the highest it's been in history. So it's a ridiculous multiple. Uh and this is These are for companies, you know, this index, for example, includes companies like Rollins, the parent company of Orkin, some of the largest companies in the United States. Um so it's interesting that not only is it trading at an all-time high, but it's also interesting in that you know, people look around the pest control industry for private market transactions. A lot of these companies are actually selling for premiums to where the S&P 500 is. So when you look around and you hear, "Oh, this guy got two times revenue. This guy got three times revenue. This guy got three and a half times revenue." I mean, at some point, some of these small, privately held pest control companies are getting valuations that are higher than some of the largest publicly traded pest control companies or I'm sorry, publicly traded companies on the planet. And if that doesn't strike you as particularly interesting, um I guess I don't know what does. Um one of my favorite charts is looking at Rollins. And when you spend a lot of time doing valuation work that I do, especially when you're focused on the pest control industry, you start to look for bellwethers. You start to look for important indices and indicators that provide some guidance as to where valuations are and where they're going. And there's not a better one in the pest control industry to look at than Rollins. So Rollins, again, is the parent company of Orkin. It's been a publicly traded company for decades and decades and decades. And all other publicly traded pest control companies and non-publicly traded pest control companies really aspire to get a route a Rollins valuation. You know, Rollins is a very stable business. It's largely owned by the Rollins family who I think even today still owns 56% of the company's equity. It's got a very small public float. It is a business that consistently kicks off a dividend and it trades like a bond. You know, a bond pays a coupon on a monthly, quarterly, or annual basis. Rollins pays out a quarterly dividend in in in the markets trade it like a bond. Um if you look at this chart right now, you've got 20 years of Rollins revenue multiple. So, Rollins price in the publicly traded markets divided by its revenue. And one of the first things that should catch your eyes on the left-hand side of the chart in that box, you'll notice that Rollins has traded historically from a a one to two times revenue perspective. So, back in the day, you know, 2003, "Hey Jim, what's your pest control company worth?" "Oh Jim, it's worth dollar for dollar." That's where that comes from. A company like Rollins was trading at one to two times revenue. And even if they got very, very aggressive, it was very rare for a company to pay more than dollar for dollar or five to six seven times EBITDA back in those days. Those um charts are I'm sorry, those gray boxes on the screen are also interesting because those mark out the Federal Reserve's quantitative easing program. And I can not and I know we're talking about pest control valuation today, but it's it's again, it's really hard when you look around the global macro environment to see what these Federal banks have done. This direct and violent intervention in in in capital markets where the Federal Reserve and quantitative easing effectively went out and increased the money supply um and how they did that is very simple. The US Treasury uh you know, the US government runs a deficit, the US Treasury issues Treasury bonds and T-bills. And the Federal Reserve goes out into the open market through open market operations and buys interest-bearing Treasury securities. And when it buys those securities, it is effectively taking an interest-bearing security out of the market. So, a a T-bond out of the hands of the investment public investing public out of the hands of commercial banks out of the hands of institutions and it's replacing that interest-bearing bond with base money. Now, base money has no coupon. It's got no interest. It's it's dead. All right, they call it dead money. And it becomes a hot potato. And when institutions that are focused on getting yield um need to get yield, they can't do it by holding base money. So, they have to take that base money and and go out and try to get yield with it. And what that effectively has done is has bid up the prices of assets that are more risky than T-bills because T-bills and T-bonds are, you know, the benchmark US securities uh not particularly risky or they're they're considered riskless, right? The risk-free debt instruments in the world. Um And so, by replacing that with base money, that base money has flown into the equity markets. And And we're going to get to quantitative easing a little bit later in the presentation. But before we do that, you know, for those of you who saw any of the presentations we did during the COVID time period last year in 2020, um we drew this beautiful chart which I think um tells a lot. Uh And And it's one that I've used a few times already because there's a tremendous amount of information on this slide. Uh there's three main things you're looking at. The light blue line is the S&P 500 index on a revenue multiple basis. So, just like the slide you saw a few minutes ago. The dark blue line is the Potomac Pest Control Index. There's nothing particularly interesting about that index. It's nothing magical about it. Really what it is is Rollins, Rentokil, Terminix, and Ecolab on a weighted basis. So, we weight it ourselves internally. And we we run it as an index. And so, you're able to see how the publicly traded companies trade vis-a-vis the S&P 500. Um On the bottom of this chart, you'll see a blue shape. Um I guess I don't have a better word for it. And really what that is is scatter plot of well, 284 private market transactions um going back 20 years. It certainly doesn't have every deal on it. There's all sorts of outliers, but for the most part, you know, using the 80/20 principle here, this gets a really good illustration of where private pest control transactions have priced on a on a price-to-sales basis. Um And I want to talk a little bit about this chart for a second here. You know, after the dot-com boom and bust, the Federal Reserve lowered interest rates in order to stimulate economic activity, right? So, that took place in 2000. And then we saw a little bit of bump in the equity markets. And then we had the unfortunate 9/11 attacks uh on the United States. And after those terrorist attacks, um as we all know, commercial activity came to a screeching halt and the Federal Reserve now doubled down on suppressing interest rates to the lowest point they had been uh in the nominal rates at least historically. Um capital began to flow into the equity markets. But what took place in the early 2000s is with the dot-com bust in recent memory, investors are constantly rotating capital in and out of segments and in and out of markets. And in the early 2000s, we saw a dramatic amount of capital rotate out of equity markets and into the building trades into homes, residential real estate, building materials, base money, and a variety of different commodities used in the manufacturing of homes. And of course, we were off to the races on what became the great housing boom and bust. Now, housing was an interesting, you know, anytime there's a a big bust in an economy, and when you look back historically, and you can look back hundreds of years, you can look at the South Sea Bubble, you can look at Tulip Mania, you can look at Argentina, you can look at a lot of different case studies. And whenever there's a boom and bust, capital typically is scared money and is is attracted to things that are viewed as most riskless or least risky. And of course, housing in the United States was super uh was a super resilient, very low-risk investment, right? Housing prices never go down was the was the the thought process until a tremendous amount of capital went into mortgage-backed securities and the housing industry. Uh I guess back then you didn't need a job. All you needed to do is own a house. Uh houses were appreciating like $100,000 a year, so you sit around play video games. Everyone gets rich, but of course, we all know what happened. We the Fed blew another bubble and it exploded. It turned into the Great Recession. And capital fleet, right? The markets deflated, a lot of paper wealth was lost. And then by the middle 2000, you know, 2008 is when we started quantitative easing. And I think on that chart is what is interesting is you know, when you look at the quantitative easing periods that began in '08, '09, '10, and '11, we start to see money again look for a safe place to go. And one of the sectors that was viewed as resilient was pest control, trading like a bond. And you could see how the um pest control index dramatically outpaces the S&P 500. You know, and that's what we call a spread premium between the pest control index and the S&P 500. In a lot of ways, folks, the valuations that we see in the private market are derivative from the public market. If Rollins were trading at one times revenue, I guarantee you you wouldn't be hearing any details from your buddies at the bar that they sold their business for 2X or 2.5X or whatever that they sold it for. That that would not happen. And the Federal Reserve has given us owners of financial assets a gift at the expense of savers and many other people in society. Wage earners haven't gotten a whole lot of wage inflation, but they've certainly blown a big bubble in equity markets. And now with a new regime in Washington D.C. um we've got AOC and Bernie Sanders effectively writing fiscal policy. We've got um Janet Yellen at the head of the Treasury. Now there's somewhat of a new social contract in America where there's wealth inequality even though it was the government that created in the first place, and now it's time to basically expropriate some of that wealth through confiscatory taxation, which is what we're hearing from the Biden administration in addition to doubling down on a tremendous amount of of spending. But before I get off on a tangent, let's just take a look back at the private market transactions. Back in around 2001 or Rollins bought PCO Services of Canada. It was a $25 million deal and they spent $25 million for it. So that was real smugly in the days of dollar for dollar. And it was a decent size business. Um by 2000 end of 2005, you know, Rentokil was doing $25 million a year as a North American business. I mean, I said 25,000, I meant 25 million a year. Um for a lot of years, for decades in fact. And finally, Alan Brown came on at Rentokil and decided to ramp up pest control in North America. They bought J.C. Ehrlich in Eastern PA based out of Reading. It was a very large transaction for the industry at the at the time and quite frankly a very large purchase price, but in retrospect, you know, relatively mild, right? Look at what they spent 1.1 times revenue for that business. You know, deep in the heart of the financial crisis, uh Clark Keenan and Company sold Waltham Services to Rollins, again an $18 million business around a $22 million purchase price, relatively subdued, deep deep deep in the heart of the uh the financial crisis where the market was in a doldrum and you can see in that private market spread there it was a very very narrow spread between the top and bottom of what, you know, companies were this is it, we're paying you one times revenue whether you're extremely profitable, not profitable, growing, not growing, doesn't matter. You want to do a deal, here's a few bucks. Western was acquired by Rentokil out on the West Coast. Western's a business that was been around, I guess, since 1913 owned Target Specialty. Um Rentokil got a steal on that business, but that was about the time, I guess, in September 2012 that we first started to see acquisition multiples begin to ramp up. Andy Ransom had come on at Rentokil as a CEO in the UK and decided to allocate the portfolio away from hygiene and textiles to general pest because as we can see by the the pest control index there on the screen, Rollins and other pest control companies began to trade at a premium to the S&P 500. So, it was time to go pure pest for Rentokil. You know, one of the interesting transactions of 2015 was Rentokil's acquisition of Steritech for 2.8 times revenue and, you know, I don't even know what sort of EBITDA multiple, I don't even remember what that was. It was the high 20s. Um You know, that was a transaction that was certainly uh talked about quite a bit and that was about six or seven months prior to Anticimex entering the United States. And if you look at the chart, the the shape there, you'll see that was the beginning. In my mind, this kind of started it all. And this was a dramatic ramp-up uh in increased competition amongst large strategic acquirers for US pest control assets. As we continue to move forward in the industry here by 2017, we start seeing three times revenue deals. Um by early '18, we start seeing 3.5, 3.6. By '19, we start to see that was a deal that we did in September of uh I'm trying to think it was a $200 million deal we did in September of 2019. It was a $200 million transaction. Then, if you folks were on our unhinged presentation, you'll recall that I said in February this year um that 2021 was going to be the year of the scarce asset, which would effectively drive up transaction multiples. You know, by February 2021, all we had to do is look at the tremendous amount of debt that the US government was taking on, the ridiculous monetary policy, um and the increased competition among the strategic acquirers, and there we have it. Now, I'm going to qualify something very quickly. You know, when I show these multiples on here, this doesn't mean if you own a $2 million pest control business, you're going to go out and sell it for eight or nine million dollars tomorrow. Now, I'm not saying that you're not, but for the most part, what we're talking about is the high end of the range here for scarce and premium assets. You know, whether you've got a business that's going to be sold as an asset deal or a stock deal, that makes a big difference. Um And so, these are not blanket statements, but this is kind of an overview of what the high end of the market looks like. Um even though deals get done at 3.5 times revenue, I can point to at the very same time deals that are getting done at one times revenue. So, there's a wide spread right now in the market as to what deals are getting done at. And um going back to Rollins, you know, I'm not going to go through too many more charts here, but here's one that I find particularly interesting. When we talked about financial repression in the um the suppression of interest rates over the last 40 years, we've seen the 10-year Treasury, which is the benchmark US sovereign rate. Um corporate debt is tied to it. Equity risk premium are tied to it. It is the most important interest rate in the United States. And over the last 40 years, that number has continued to go down and down and down. Um and you can see it on here on that green So, on the on the left access, we have Rollins again. That's the darker line. That's Rollins. You saw that same chart earlier on. The green line there is the 10-year US Treasury. And Rollins and pest control companies tend to trade inversely to interest rates. Again, they trade very similarly to a bond. Um at least they have historically. I I think at some point here, given what's going on in the market, that is going to break down. And I think that that will probably break down relatively soon. But when you look at this chart, look all the way to the far right-hand side, you'll be able to see that uh in February, March, and April of 2021, there was a backup in yield. So, the 10-year, you see that on the lower right side, the 10-year um yield has increased. And Rollins rolled over. Even though Rollins had reported some pretty great quarters, the stock has traded sideways and the trends out and the trading multiple has continued to decrease. So, that is part of the rotation from growth stocks to value. Rollins and pest control is more of a growth stock, given that it's a GDP plus business. Um capital tends to rush into uh stocks similar to you know, pest control stocks as growth plays. Um just as much as defensive plays, but they tend to trade closer in my mind to some growth stocks, at least historically. One of the big themes for this presentation today, and you know, and and the main reason why I actually did this is, you know, we've had this run-up for many, many years in transaction multiples in pest control as well as overall. You know, and at some point the party's coming to an end, and you know, it has lasted a lot longer than I thought it was going to last, but I'm actually starting to see some substantial changes in the market that lead me to believe that we're very, very late in this, um, acquisition boom. You know, I think a concern for all of us is the tremendous amount of debt the US government's taken on. This is a 100-year view at the US deficit. Right now, we've got a budget and a current account deficit, so we've got twin deficits. We've got debt to GDP of 130%, which is substantially higher than it's been anytime since World War II. And unfortunately, the US is a far less productive country, uh, than it was in World War II. Clearly, we've unfortunately shipped all of our manufacturing overseas, and hollowed out our productive base. Now, we've taken on a tremendous amount of debt to the extent that the US Federal Reserve now needs to monetize debt, right? So, foreigners have been net sellers of Treasury assets since fourth quarter of 2013. And as you can see by this chart here, the US Federal Reserve Bank is now a bigger purchaser and owns more US Treasury debt than foreigners. And I know a lot of folks talk about the US dollar as the reserve currency. I mean, the US dollar's only the reserve currency because the US Treasury is the reserve asset, right? The US dollar is a reserve currency derivative of the fact that the US dollar is the reserve I'm sorry, the US Treasury is the reserve asset. Just like just like 30, 40, 50, 60, 70 years ago when the US dollar was a reserve currency, when you had the Bretton Woods system, it was the reserve currency because it was tied to gold, and the US Treasury has replaced gold. Uh but the problem that we have right now is the Federal Reserve is buying Treasuries, effectively converting that into to non-interest bearing base money, and we're monetizing the debt, and we're starting to see the inflation uh in the market today. And um I think that that will have dramatic impact on risk assets going forward, but the first most important thing for you to know from this presentation is I think we are at the highest point we have been from a um valuation perspective in pest control. I think that it will continue to ramp up this year. I think all of the government fiscal spending and monetary policy is extremely bullish for risk assets, but I think we're coming towards the end here. Um and we're coming to very, very risky times um based on what we're seeing. Um if we talk a little bit about corporate debt, although the value of a business is really just the present value of a stream of cash flows, and it really shouldn't have any bear, you know, interest rates shouldn't have any bearing really on valuation at the end of the day. When you buy a business, you're buying its future cash flows. But when central banks were able to manipulate money supply, and we now live in a world where corporate debt yield or, you know, interest rates on corporate debt are the lowest they've ever been in history, where companies like Rentokil used to borrow at 5 and a quarter percent 10 years ago, and now can go out and borrow at 50 basis points or 1/2 of 1%, it's having a dramatic impact on not only creating zombie large publicly traded companies, uh but also allowing companies and private equity firms to effectively do levered carry trades by going out and buying pest control businesses. So, currently today, courtesy of uh the US doubling down on helicopter money to pay people to sit around play and you know, stick around and play video games all day instead of work. Payment protection programs, all sorts of government spending, the Federal Reserve dramatically increasing its balance sheet, buying mortgage-backed securities and corporate debt. We now have corporate debt in the United States at 11.2 trillion, which is half of the US economy. Um continues to be bullish for Bush risk assets, but at some point it will begin to slow down. And this brings me to one of Patrick's favorite parts of any presentation, which is a case study. So, like a genie, can I summon Patrick? Oh my goodness. I'm like a kid in a candy shop. You say You say case study and I'm There's supposed to be like confetti coming down. There you are. So, Patrick, let's let's get our case study on to try to bring a little bit of this to light. So, we've got Project Beetle. This is an actual transaction. So, in my early years, um you know, I was a bulge bracket investment banker. What does that mean? That means I when I graduated from Cornell, I didn't know what the hell I wanted to do. And um back in those days, it was, you know, the late '90s. They were literally taking nerds from schools and put you know, you could have worked in the the drive the Taco Bell drive-thru window and an investment bank would have sucked you up and put you in New York, London, or San Francisco. So, I started working in bulge bracket investment banking in tech banking on the West Coast, Silicon Valley, taking businesses public all all day long. Did that for some years, went into private equity, and then we got out and we started Potomac. We did that in 2003, and at that point in time, you know, we were a generalist firm experimenting with, you know, we were taking American effectively disposing of American capital portfolio companies, and I stumbled upon pest control, and this is one of my early deals. This one closed in 2006. So, Patrick, because I'm an old man and can't see that screen, what sort of revenue and EBITDA was Project Beetle doing in 2006? I've got this. All right. Top line gross revenue $3.4 million and some change. Adjusted EBITDA way down there, 800,000. Indeed. So, here I am, bright-eyed and bushy-tailed. This is maybe my third or fourth pest control deal. It was a small one. We took this bad boy out to market. What do we have? We've got no bidders, really. We've got Rollins and we've got Terminix. It's a duopoly. You know, Rentokil had just acquired uh JCE Europe, but they weren't buying anything. No private equity firms wanted anything to do with pest control. Winpoint had already blown up. Winpoint was a PE shop out of Chicago that came out, bought Wilson. That thing had blown up in the '90s. And now all of a sudden, here we are. Terminix, Orkin. I don't even remember who else maybe looked at this. Um But guess what, Patrick? We ran a process and we got the price up super high and I was very proud of what we sold this $3.4 million business for. This was a tough multi-month process negotiation. Walking away, slamming stuff down at the table. And what did we get for it? $3.7 million dollars. That's right. That's right. So, we sold a $3.4 million business, growing top and bottom line, low double digit um growth rates, 82% uh recurring revenue. Uh really a great business for $3.7 million, but Patrick, this chart was for you. And tell me what it means. I said, "Hey, if if you take a business you sold in the past, right, and how valuations have changed over time." We talked about inflated asset prices, not just in pest control. If you sold in the past, you sold in the future, what would that look like? That's right. So, so this is somewhat of a thought experiment using past transaction statistics we imputed what project beetle would have sold for at different points in time. Obviously, we did not sell the business five or six times. Um, in 2004 we would have sold for 3.5 million. Everyone's getting rich flipping houses. No one wants to buy pest control. It sells for 3.7. Had we have sold it in the heart of the financial crisis, um, we would have sold it for 3.3 and excuse me, fast forward to today in the month of June 2021 we're probably looking at 10 to 11 million dollars for this East Coast business. Um, it's a quality business growing at the right speed and um, and that's likely where we would end up today. So, that just demonstrates the asset price inflation in this industry as well as other industries. I guess the number two thing that you should take away from this presentation is that the market over the long term tends to get everything right, right? But over the short term markets can dramatically misprice assets and we're seeing a dramatic mispricing of assets in pest control and other assets. I mean, let's take GameStop, Patrick. Was GameStop adequately priced or was it appropriately priced when it was trading at like $400 a share? No, it was not. Is Bitcoin adequately priced at, you know, 40,000 a coin? Who the hell knows, right? So, we've got this speculative frenzy. Central banks are creating money. It's ultimately going to turn into, um, into a big headache for everyone at the gas pump as this inflation continues. But this is what the hell we're looking at. Um, a lot of asset price inflation and mispricing of assets. Now, we could talk about, um, valuation, which is what I love to talk about. But Patrick, unfortunately, you have other discussions and those are generally related to Uncle Sam. What? Tax. Uncle Sam. Uncle Sam, cuz Uncle Sam doesn't spend as much time in Texas as he does in DC, right? So, you you don't worry about the the state You don't worry about those folks in those cowboys in Austin. You worry about the uh the red coats in DC, so to speak. And so, if you were to take um if you were to take Project Beetle and sell that bad boy today at 20% capital gains tax, you'd roughly walk away with 8.7 million bucks, assuming a debt-free cash-free balance sheet, right? And everyone, you know, I know on the buzz I I I see the questions that get sent in. I mean, they're not just all about how I was Paul so handsome and charming. Um a lot of them have to do with taxes. And we've brought like Corey Vargo from Wiffle, and 19th largest largest pest control firm. I guess Wiffle is a pest control firm, not Patrick. 19th largest accounting firm in the country. So, what these guys have effectively done is they have taken the most boring thousands of the most boring people on the planet, put them together, and these guys are all figuring out taxes. We brought Corey this tax expert on. He's um on the buzz, and he said, "Hey, this was in September last year. Taxes will probably go up, but it's not going to be retroactive. It's not going to happen in 2020. Okay, fine. Now, we're in 2021. We've got Biden here. He loves to blow everyone else's money. It's always easy for everyone to get on TV and say rich need to pay their fair share. Let's spend some money. Let's steal it from somebody else and pay it. Um no one likes to pay it out of their own pocket, but it's always great to get other folks to pay it. But, at some point capital gains taxes will go up, cuz we've got to pay for this master masterful cluster that we're creating. Now, will it happen this year? I don't know. Will it happen next year? I don't know. But, when you look at valuations and they're at a point right now where if pest control valuations go much higher, we've got a negative forward return. When acquirers are buying businesses, they're buying businesses to get a return. And the return of a business is inversely related to how much I pay for it, right? Like if you buy a an apartment building and you're getting a thousand dollars a month for it, um you know, it if you pay 50 grand, um you're for that building, your return is much better, right? Than if you pay 100 grand for it. So, at some point we get to negative returns. And on some of these transactions, we're pretty damn close to it. And that's one of the indicators uh that I keep in mind as we start to reach the top. Number two, by the end of 2021, there's going to be three or four private equity additional private equity firms into this space. What does that mean to me? Private equity always comes to the party late. Do a little bit of research, look at the consolidation booms historically. Private equity, these guys are out drinking, hanging out in other industries. When they see things blow up, it's time to roll in the pest control. And they're here in town, and they've been here, and they've been sniffing around, and we'll see it this year. But, what happens if we get to 2022 and on the top right hand side, let's pretend for a second, Patrick, valuation multiples are the same. Biden gets his wishes. He makes you pay your fair share, you dirty, greedy businessman who has not created tens of thousands of jobs for an industry. You guys get to pay your fair share. Taxes have doubled now. So, what do you get? You're you're you get shafted 1.7 million dollars to fund some sort of gender study in Pakistan. Congratulations, you're paying for it. Now, that's a that's a shitty situation to be in, but I think the worst situation, and far worse than that, is if let's say taxes didn't change, right? They're still the same, and valuations roll over and begin to revert towards the historical mean, now you walk away with a a measly 3 million bucks. Not a good position to be in. At the end of the day, number three, taxes will be the least of your concern at some point in the future if you own financial assets and your ownership of a pest control business is a financial asset. Now, I'm tired of hearing myself talk. I think it's time to bring the venerable Andrew Klein and Mr. Jay Brown from Terminix to grace us with their pleasure and tell us what is going on in the world of big pest. Gentlemen, Very funny. Thank you. Thank you. Thank you for having us. Makes sense. I appreciate it. I I know just visiting with you all getting ready for Super Nova, I can tell you all are really authentic and just want the best for people, especially as you're doing acquisitions and and make sure that they fit in. Question, Jay, outside of the the owners, I have conversations, you know, owners, guys and girls that are looking to to sell the business. They at least at least in heart they say, "I want to make sure my people are taken care of." Right. So, what does it What does that look like as far as opportunities, benefits, you know, safety? What What does that mean for after the acquisition, what it looks like for those employees? Yeah, so that's why one of the things that we, you know, really focus on to bring in that there's new teammates and bring them into the fold. And really, you know, cuz that's, you know, they're going to throw a lot of What's going through their head? What's going to mean to us? How's it going to work out for us? And when, you know, what we try to, you know, what I look at it is, you know, we make sure they get that extra attention, right? We want to make sure that they understand that they're they're part of the family from day one. And there are a lot more opportunities and I can give you examples, you know, from a lot of different areas, you know, even in with Andrew's team, we recently were able to take one of his his associates from a short and now we've plugged them into a management role within one of our uh Connecticut branches. So, we're able to provide that we're it's we're an international company, but, you know, think of it even just across the US, the number of opportunities that we can provide to people. Benefit-wise, I a lot of times we do see the power that of the the size of the company to be able to offer a benefit package that is, you know, tied to a 401k, tied to different benefits that they may not be able to get with their current company right now. And, you know, it's really how do we give them a a path to the to get to the levels that they want to get to. So, as we're we're working together and coaching them through their careers, finding out what's making them tick, and find out what opportunities they're searching and we you know, there's a lot more opportunities that that we can offer across the enterprise for someone coming into the company. Questions for Terminus. What is it What is it like working with Paul on a sale versus listing with a broker versus selling on my own? Well, that's an interesting one. That is an interesting one. So, um I would say, you know, just as I just said, you know, I know what I know, you know, Paul and his team are experts in this, right? So, don't I would say do not think that you can, you know, um toy or sell your most precious asset that you've got as a entrepreneur and a business owner on your own. The value that Paul and his team brings to the equation is immense. Immense. So, I mean, listen, I've been on both sides of this equation. I've been on, you know, the ownership side selling to a large company like Terminix. And now I'm on the other side of the equation as Terminix, the large company, wanting to acquire, you know, lots of different size businesses on the other side. I can tell you, I see the value day in and day out of what groups like Paul's bring to the table. Do not try this on your own. Right. Jim McKelvey's one of my favorite clients. And Patrick, Jim joined us on the buzz on what episode was it? 25. Okay. So, Jim was on Jim's favorite. Yes, so Jim joined us on episode 25. Jim was a client, Jim and his brothers at JP McKelvey were clients of Potomac for a good decade. We ultimately took that business out to market in 2018, sold in 2019 to Anticimex. Jim runs JP McKelvey today, Anticimex's portfolio company up there in New York Metro, Connecticut. Um And Jim's a busy fellow. And so, Jim and I were both traveling the other day. We wanted to get him online if he's traveling today. And so, Patrick, you sat down with Jim and had a few few minute chat with him. And we're going to bring that on. And and I have yet to see this video. So, I'll be seeing this for the first time. And then after we speak with Jim, we're going to be we're going to bring Paul Bergman on, who is in another AX portfolio company at Viking in New Jersey. So, let's let's go ahead and roll the tape, control room, shall we? Jim McKelvey, welcome to Supernova. Hey, thanks for having me. Looking forward to meeting with you guys for a long time. Hey Jim, you were on the Boardroom Buzz episode 25. So, some of this might be an extension of what we heard on that episode, but you're definitely a fan favorite. Take us back. You were a long time client working with Paul and Potomac. What, 11 years or so? Yeah, over 11 years, absolutely. Um, you know, when I first started thinking about, you know, transitioning the family business uh to someone else, a larger a larger entity, um I did connect with Paul, met with him in a Starbucks down in New Jersey. Really appreciated the way he approached uh you know, the situation. Um we discussed several different possible outcomes, how he looks at uh things, you know, what through what lens. Um and you know, he's a former Cornell graduate as am I, so we had an you know, an instant connection. So, you know, fast forward. I'm sure that you continued this conversation, continued the relationship with Paul and what, it was 2018 you decided to sell? Yeah, Paul, you know, over the years we had we had had multiple discussions with uh you know, different buyers at different times. Um and uh you know, the big three. Uh and uh you know, AXE had come into the market and Paul uh reached out to me and you know, he disclosed. He said, "Hey listen, I'm you know, I'm having some you know, deep discussions with uh you know, the AXE group and uh I really would like you to uh uh set up a meeting with Michael Vinney, who is the US North American uh regional president." Uh so, he connected us and and uh the three of us went to dinner um in probably January of '18. And uh and uh you know, from there we just sort of built a relationship and uh again, you know, and then we you know, we came to market probably in March and then by May 1st uh you know, the deal was complete. Jim, before joining up with Anti C Max, tell me what it was like working with Paul leading up into that transaction. Yeah, so I mean working with Paul was was, you know, in in my opinion was was phenomenal. He you know, I had two brothers in the business, two two partners. So you know when you know you engage in the process of of selling your entity, a family business, you know, a lot of different things are coming into play. There's emotions, there's you know, money, there's there's a place a new home for your for your teammates. So you know, decisions come fast and furious. You need somebody to help like shepherd this all along, keep the peace between you know, the three partners because at some point you know, your interests will diverge. And you know, Paul was an integral part of you know, keeping everyone together and moving this thing down to the you know, to the goal line and ultimately pushing it in with the AXE group. Just want to thank you guys for having me today. You know, I I I've dealt with Paul Giammarco and the Potomac group on both sides of the aisle. They're the true pros. They the the SIM in the book that they deliver to prospective um uh you know, a sellers and acquirers is is you know, is very very professional, very clear, really provides a a lot of clarity around what's going on in the company and will help you know, maximize you know, your asset that you've worked your whole life for. So I thank Paul for his interest and time and I look forward to speaking with anyone who has you know, any thoughts about you know, moving on, joining becoming part of something bigger for your employees and and and better and ultimately you know, great things for yourself. So thanks again for for having me. I really appreciate it. But while we've got Paul Bergman here, I want to bring Paul on and do a little chitchatting about uh Jersey and PA. Welcome, Paul. Hey, good morning, guys. Thanks for having me. Absolutely. So, Mr. Bergman, you and I were busy in the fourth quarter. Uh it was total insanity. Tons of deals got done. I think uh you and I got a few done and one Was it I think one maybe rolled over to to Maybe no, we got them all done in the fourth quarter, didn't we? Yeah, we got them all done. It It was It was a busy year, for sure. That's right. So, you are the president of Viking. Um you formerly came from American, though, isn't that right? Yeah, correct. So, when American was acquired by Anticimex back in 2016, uh I was there working with David Billingsley and and the Nixon family. Uh and a year later, the Viking uh transaction took place and then that presented an opportunity for me, which I'm, you know, very grateful for. So, it's it's a great, you know, story to tell when I'm talking to potential sellers. Um you know, I'm I'm living proof of what opportunities exist when you sell your business. So, it's been really fun. Uh it's been an adventure. We've helped grow the business uh just, you know, tremendously. And I think, you know, we're looking forward to continue to do the same thing for the next couple years. Your pest control business right now is being dramatically mispriced by the market, right? The value of a business is nothing more than the present value of the future cash flow streams. I mean, we can blow all the smoke and say all the that we want, but at the end of the day, you're the acquirer's effectively buying a stream of cash flow going in the future. Irrespective of what interest rates are doing or anything, that stream of cash flow does not change. I mean, that it's a it's a stream of cash flow growing. And so, the the interest rate environment doesn't have an impact on that. It has an impact on investor psychology and where the market's pricing these things now. So, we're in a period where there's dramatic mispricing. We're also seeing at the very high end of the market, these deals are getting done with future implied returns in the very low single digits. You see valuations go up any higher than this, it actually doesn't make sense to do the deal, right? I mean, at some point, if you just think about this, if you're talking about doing a deal at 15 to 20 times EBITDA, you're better off not buying the company, you know, at some point, it doesn't make sense to do the acquisitions, right? So, we're effectively beginning to approach this point. Last week I was on the road, I met with the you know, I met with Paul's boss at Anticimex. I met with the Rollins guys. I met with the Terminix folks. The list goes on. I saw Certus. I sat down to dinner with Mike Givlin. I saw all these guys just last week in one of my first big trips post closing post COVID, and we talked about valuations. And more time and then at any other point in the last few years have I heard from these guys that it has gotten ridiculous. We are getting more selective, and we are not going to be indiscriminate, and we expect at some point for these things to roll over. So, that's what we're hearing. Paul, any input on that? Yeah, just yeah, I do actually. And it's it's interesting question. Um And this actually ties into marketing, which is not really what this is about, but what I do see is when we get to those ridiculous multiples where people say, "Hey, I'm not going to continue to pay these multiples." You start looking at your marketing dollars, and you say, "What can I do with digital marketing in a targeted spend?" And one thing that is not reflected in in your historical charts there is we have technology now to target and focus in on on who our ideal client is that we can utilize, and for far less money, I can target and build this business organically, especially when it comes to the smaller transactions. I may not go out and just organically grow $10 million overnight, which I could do with the transaction. But could I grow, you know, half a million, a million, two million dollars organically by spending a little more money in a particular, you know, geographic area? Absolutely. So, those are things we're starting to look at because, like you said, we're we're kind of getting to the top end there and at some point you got to say, "When's enough enough?" And what other means do we have? And really digital marketing is what we have. Patrick, I think now might be a pretty good time to take a quick break and and bring Tony and Mike Schmidt on to enlighten us. Thanks for having us. Absolutely. So, Tony I actually is one of my favorite guys in the pest control industry. I consider him a dear friend and um working with him and his brother Phil was was a pleasure. We did that transact. When did that deal close, Tony? It was in 2018? October of 2018. October 2018. So, American bought um Triple S in 2018. Mike Schmidt, who we just saw a second ago, was the M&A guy executing that deal for Anticimex. American bought it and effectively integrated Triple S, which was a roughly eight, nine million dollar largely commercial pest control business in the Mid-Atlantic with accounts like the Pentagon, Department of Defense, and a lot of very storied names uh in the DC area. But, um Tony, you sold in '18. Why'd you make the decision back then? You're a young man and I'm uh and and I and I know that that's not uh hair dye on your hair. That is natural. Fortunately, yes. Uh well, you know, my brother I think met you before I did and we got to know you over a two-year period and during that period we you were growing the business We were watching what was was happening in the industry and and some of the acquisitions that were occurring. And we kept in contact with you. Um you know, quite frankly, it was just simple. We saw an opportunity that we didn't think would ever come around in our industry. And so, the timing felt right. Um and I think, you know, quick story, when you you introduced us uh to the American team and Anticimex, um at first, they they weren't at the top of our our list or my list, but once I met with uh with David and other folks at American, I soon realized quickly that they were probably the best fit because we shared so many so many synergies. And uh I think uh they made the process so easy and and with your help, too, it was it was just the right decision for us. Um as you I I've been speaking the last few minutes about the perfect storm. Um we just kept watching a lot of our competitors in the marketplace sell. Um I'm very impressed with what they were selling for, so we ventured in with you. And um you know, found a good fit with American. And I have one more question. This is for the two of you, Tony and Mike. You know, one of the one of the questions that we've received most this week as we've done this presentation and talked to to various folks that have been both in both of your positions. A lot of people ask, "Okay, I want to sell my business. Am I required to stick around? Do I want to stick around?" And you know, and I always look at it myself personally and say, "Okay, well, how really involved in the business are you? Are you just a shareholder or you're not needed? You just sell your business, you're out." Sometimes there has to be a transition. In my experience, it's often better for sellers to go their own way after a sale because I find it's very, very difficult for, you know, if I own a pest control business, it's two Let's say it's a $2 million business and I sell it to any acquirer, there are going to be changes. And I think most of those changes tend to be positive, although I might not always view it that way. And so, I think it becomes very difficult sometimes for sellers to stick around. Tony, I know you participated for for a while, a short while after the sale, but you're I think your goal was I'm either going to run this business myself or I'm going to sell it and then I'm going to go do something else. So, could the two of you talk a little bit about how you guys think about that sort of stuff? Sure. Mike, you want to first? Sure, I'll go first. I think it definitely depends on the seller, Paul, and it depends on sort of where the business fits in our footprint. We have a guy here named Bernie Cox who sold us a business a couple of years ago who took a job with us and and is a great integral part of our organization. You're definitely right that folks who have run a business for a long time tend to have a hard time with that change. But, folks who are talented and who really enjoy going to work every day and being part of the business, you know, there's definitely room for them in our organization. Great. You know, for me, I was on the other side of that fence. I, you know, I've been doing this for 30 years. We really worked hard at growing our business. And I stayed for 6 months. They had asked me to stay for a short period of time, which I did, and I think it was beneficial for everyone, but I think it was also it was also the right period of time because I was just there to basically to reassure everyone that what we had done was was a good decision and that it was going to be good for them and that there was going to, you know, no one was going to experience any any major changes that were going to change their lives, but I was ready to go. So, to Mike's point, I I had poured everything into this for 30 years. I had my finger on the pulse of everything that was going on in the business. And it gotten to a point where I was just um you know, I I didn't think that uh I had the same drive that I had and that was important to me to to make sure if I were going to do something, I was going to do it to the very best of my ability and I felt personally that I was starting to uh just for lack of a better word, burn out. Um so, staying for that short period of time to make sure the transition was as smooth as possible was was the best option and then uh you know, leaving thereafter was perfect and of course David and others at American, if they needed anything, uh I was always available and we always maintained a a good relationship and spoke to one another often. All right, let me throw another question y'all's way. Valuations are at an all-time high. How high can they go? And if the bubble burst, how low will they go? And how soon? That's an impossible question to answer. I mean, I I'm of the mindset like it's very hard to predict. You just have to be prepared. And at the end of the day, I I look I I think these valuations really come down to basic math. I mean, we're at a point right now and I'd be interested in Mike Schmidt's perspective on this as well, but I I I feel like we're we have gotten to the point where we're starting to price assets now with forward implied returns in the very low single digits in certain cases. At some point, it just doesn't make sense to It doesn't make sense to make the acquisition, right? Uh firms acquires can redeploy that capital elsewhere and in 2021 more so than at any other time in history, I've started to hear a lot of moaning from the folks high up in these organizations. Last week I was on the road, I met with uh you know, the Rollins guys, I was with the Anticimex guys, I was with the Certus guys, with Terminix guys, with all of these different folks and we're starting to talk about, you know, where this market has gone, how it's gotten crazy. So, I I you know, at some point it it will begin to roll over. And I I I really truly believe that we're at kind of the batshit crazy mental valuation level where it just doesn't make sense for it to go any higher. How low will it go? I don't know. I mean, I think it I think everything's mean reverting, quite frankly, and I think we'll probably overshoot the median at some point. Timing, I mean, if I knew that, I wouldn't be having this conversation right now. I'd be doing other things. Anyone else want to take a stab at that? I'll comment on that. He wishes everything was super low immediately. That's all he heard. Yeah, I I was going to say I I I think uh valuations are are creeping down as we speak, right? But but in all seriousness, I think you have started to see some of that take place in the market. Um I know, you know, quality assets, uh high-quality assets are always going to garner uh market premiums. Um but not every pest control, when Paul says multiples are at four times, not every pest control's going to trade at four. Not every pest control company is going to sell for four times revenue. Um high-quality assets will continue to garner high valuations into the future. Even if there is a market correction, they will still garner market premiums. Uh it's sort of your average business that's really going to see that change from you know, trading it two, maybe even three times revenue if it if it's in the right place at the right time, to maybe, you know, back to that mean reversion of one times revenue. Um what matters more from an for an acquirer, from a valuation perspective, is what we can do with the business after we acquire it. It really is our post-transaction multiple that matters to us, not necessarily what we pay you for the business, but what it's going to look like 12, 24, 36 months from now. And there you go, Mike. Smooth, Mike. Now is a good time to take a break and bring our colleagues from Anticimex on, unemployed Kyle Rona and barely employed Bill Talen from Turner and have a chat with these guys, shall we? Welcome, gentlemen. Hey, good morning. Can you talk to us a little bit about about Turner's service footprint and your philosophy on on growing that business? I mean, I guess Bill, at the end of the day, what what we want to talk about today is we think about the Southeast of the United States, we want to talk about what's going on from an M&A perspective down there. What's that market like? What should sellers be thinking about and why might they want to do a deal with uh with Turner? Uh sure. So, based out of Jacksonville, Florida, it originated with a builder program where we would provide some termite treatments with the builders and from there we would use that to help develop value creation and sell other bundled services, if you will, and and further increase, you know, our portfolios. We've expanded that, obviously, throughout the state, up and down the East Coast and and on the West Coast. Now we're experiencing some great growth as we move into Georgia. Now, this is no different than, you know, some of my peers that are in other locations in the Southeast leveraging the builder relationships that we have and we think it's a fantastic opportunity. What I love about the Turner team, right, is the fact that, you know, there's a lot of great folks on the leadership staff that has the employees as, you know, first in mind, which then ultimately takes care of the clients. So, for us, it's all about making sure that, you know, we deliver fantastic financial results is what would be expected of somebody in my position, but then on top of that, how are we making sure that we reinvest into the infrastructure of our team and then ultimately how do we continue to improve the client experience. And then we push that out throughout the entire organization even as we continue to move into geographies that we don't normally have any experience in as an example some of the new footprints that we're you know experiencing in Georgia which is fantastic. So we apply the same type of thought orientation into looking for those acquisitions and once they align with what it is that we're trying to do and we believe that there is a good mutual relationship between the two of us then we take the next steps forward. Well Kyle, I know you uh recently you know I think what February or January if I remember right you had a a conversation with your parents that said maybe maybe it's time maybe it's the year and so I think you called on Potomac and said hey let's let's at least see what's going on in the market. Yeah, during the pandemic I was listening to the Boardroom Buzz and really like the content and the guests that you guys had on it and uh you know just kind of really enjoyed um listening to it. So you know when January came we me and my dad had spoke about transition and and seeing if I could possibly buy the business in the fashion he was able to buy the business from his dad. And so the first step to that I told him we need to see what it's worth first so that's what we did and you know unfortunately it's worth way more than I could ever afford and definitely couldn't couldn't finance it in the manner he was able to in the 90s when he bought it from his dad. So we came to an agreement to what would be fair to to my family and and my mom and dad and make sure that everyone's taken care of and still loves each other in the end and we decided to move forward with um putting the the business out to market um you know from the get-go we really were interested in doing business with NTC Mex and Turner because we know several other companies that had sold to them and had good experiences and our employees were well taken care of. There's a tremendous amount of opportunity given to them by partnering with NTC Mex and Turner. So, we felt that that was the best fit for us and if that we could come to an agreement with them and that's who we'd want to move forward with. We were able to do that and it really was pretty quick. I mean, we engaged with Potomac in January and we sold the business May 3rd. Alex is one of the I I would argue the most experienced M&A professional at any of the largest firms. He's with Radikal North America. Radikal's a British firm and they've got a massive operation here in North America. Alex has been around since, you know, I think around 2005. He has driven all of the large transactions in in North America as well as been involved with us in transactions overseas. So, he is a wealth of knowledge and great to have you, Alex. Yeah, good to be here, Paul and Patrick. Thanks for having me. Hey, the the the first question that comes in, what is the valuation historical mean? Is it one times revenue? Is it two times revenue? Paul, you want to take that one or You know, I'm going to toss you know, Alex, you're I'm going to toss it to you first. Put him on the hot seat. I'll take take a drink of water, Alex. You're you're the macro guy, Paul. You know, Paul's right. We did buy some businesses at certainly 1.5 or below and that was, you know, back in 2006, 2008, even up to 2012 when we bought Western. You know, sometimes there's that point where a business it depends, you know, on on the situation that a business is almost so large who has the money to buy it, right? And so there's there's that issue, but I think it Paul laid it out pretty quick I I or pretty um thoroughly. You know, obviously since 2012-13, we've seen valuations go ups dramatically. So, um do we still buy businesses at that lower level? Yeah, I mean we'll there's some businesses that we don't want to buy at all at any price. There's some businesses that are worth one times and there's some businesses that are worth two times and there's some businesses that are worth more than that. You have to operate in the competitive environment. It's extremely competitive right now. Um and I think each each buyer, and that includes us, has to figure out what works for them and what their you know, so we there's a lot for sale right now because of the the market, right? A lot of people are taking advantage of the high valuations right now. And I think each buyer needs to figure out what what means the most to them. And that's what we do. We can't go after them all. Um and so we make a concentrated effort to go to after the ones that mean the most to us. Yeah. Alex, you said there's some businesses there's some businesses that you don't want to buy at all. I'm I'm I'm I'm wondering, is that a is that a a threshold of revenue or is that a culture or is that a profitability or what what just kind of puts you in Well, there you know, there's there's a whole um a whole spectrum of of quality businesses out there. Doesn't necessarily relate to size. Uh we just bought a $300,000 business in Oregon uh a couple months back because it was we were subscale in some of the parts of the area that this business serviced, but you know, I think for us we're we're looking for really good people. We're looking for good uh service. We're looking for good pricing. Um we like people who are paid well because we want to pay our techs well, right? We want people who uh can come along and save for retirement, buy a house, put their kids through college, those types of things. And so, you know, not every business does that. We're not for Rentokil, and different people have different approaches or different owner or different you know, the different large companies have different approaches. But our approach is we're a little bit more of a we're going to provide a premium service and a bit more of a premium price. And so, that's not different you know, there's different models out there, and those work for those sellers. Um and there could be a buyer for them, but we just have to, you know, at Rentokil we just have to figure out what what kind of works for us and fits in with our structure. All right. Yeah. So, on the historical mean question from my perspective that Alex, that was a great overview of what's going on in the private side. When I for me, from a valuation perspective, I'm always looking at the publicly traded companies out there. And so, when you look at companies like Rollins and Rentokil and Terminix, I mean these S&P 500 style businesses historically would trade anywhere between seven and let's call it 11 or 12 times EBITDA, which is really, you know, 1.2 to 2.2 times revenue. Somewhere in that range historically. And I know it's really hard to look at stock valuations now and even think about the fact that we're talking about for decades and decades and decades that's where these businesses traded. And so, I do think that pest control in this environment has been re-rated by the public equity markets. And what that What does that mean? That means instead of being a a a seven to 10 times EBITDA business, it is a, you know, 15 to 25 times EBITDA business. And Rentokil and Terminix and these folks are benefiting from that. But at the end of the day, from a histor- From a historical mean perspective for a privately held pest control company, it is clearly without a doubt one times revenue. Five to six times EBITDA. That's where it is. Let's bring these two characters from the West Coast on this mountain of idiopathy. The characters. Yeah, let's David will be picking his nose over there. Oops. I am a character. There's no doubt about that. So, I know I missed the kind of the introduction here, but I want to be able to give a proper introduction. And I'm going to start with David Billingsly. So, I met David a good five years ago. I guess right after he became president of American Pest, which is an anti-Semitic portfolio company out on the East Coast based in Maryland. Um He and I have done a lot of deals together, have a wonderful relationship, and he's really done a great job building um American Pest. I mean, I If I think back, David, we did Green Star together, we did Triple S together, we did Innovative together. There's probably a lot others that I'm not even thinking about, but we've done a lot of deals over the years. Um Shane Hoy. I think Shane and I met, correct me if I'm wrong, Shane, in around 2013. Does that sound right to you? Yeah. Yeah, 2013, 14 maybe. Yeah. So, I remember, yeah, maybe that's right. 2014 It was Yeah, it was a little bit later. That's right. It was 2014, maybe 2015 even. But Shane and I Shane tracked me down one day and we started talking about pest control valuation. He had a business that he and his brother had bought when it was super small and you guys were growing it and you were actually, I think back in those days, thinking about potentially selling it. And I think we did a preliminary valuation and we maybe had multi-month discussions about your business, but I think, Shane, we were in the era of transaction multiples going up literally on a quarter-by-quarter basis. And I think you and I had some discussions and said, "Hey, Shane, why the hell would you sell this? You've got a great base. You've got a lot you can do with this business. Knuckle down and continue to ride that wave as they go up. Is that a Yeah, I mean that was one of the things I really appreciated about our our first conversation or that that engagement year, I suppose. We if you remember actually we called I had contacted you about trying to sell a piece of our pest control business That's right. some cash. And and you didn't mince words. You said that's stupid. You know, here we'll do evaluation for you, but that's a really stupid thing to do, Shane. And you know, you gave me some some good reasons as to why that was a stupid decision. Um but never, you know, we we sort of engaged in that way and then we're able to just continue a a relationship for a number of years. Uh I think with you sort of acting as an advisor, even though I'm not sure we paid you to do that. That's true. You did not. Um but you ultimately ended up when the transaction all worked out. So, Shane's a typical example of the types of individuals I love to work with. I mean back in 2015 we we met, we did a a preliminary evaluation. We started to have some chats about various strategic alternatives for the business, but Shane's a a guy that he and I kept in contact over the years and talked about these things. I mean I I sometimes write commentaries. I haven't done it a whole lot. Um but I think every single time I would write when publish one, Shane always had a pithy comment. Um like I can't believe you just wrote that type of thing. Um And then we started, you know, I think Shane, correct me if I'm wrong, but you started to see these evaluations increase over time. You and your brother are running this business. Um you're really starting to see some progress. I think, you know, taking a business from a few million dollars up to where you guys ultimately grew that business is super hard work and it costs a lot of money and you know, you started to look at transaction multiples and I think it was Was it about 2019 when it was end of 2019 and we started I remember I think I was in Stockholm. We started having some some discussions. And you said we're kind of thinking, you know, what's our next step or they're going to knuckle down and I remember having some chats with the guys at Anticimex in Stockholm and they started eyeing the West Coast. I called you up and I said, "Shane, um you if if you're going to do something, you want to be the platform acquisition, right? You want to be the first entry acquisition by a large company in the market if you can pull it off. Um take a meeting with the Anticimex guys and see if you like them." I think that's kind of how it went, right? That's exactly how it went, yeah. So, they we had PestWorld out here in San Diego that year, 2019, and we ended up you know, it was an easy lunch meeting. It was only 30 minutes from home. So, sat down with Michael Vigneault and and the uh Anticimex guys and had a good lunch. And really we just felt like we meshed really well. I mean, there's it's rare, you know, that you sit down with somebody and have a conversation where you just feel like we understand one another and we could work together. But, that worked well for us. Is it true that I was in Europe at the time of that meeting, but I told the Anticimex guys that you were a very dark-complected uh Korean man? Is that true, Shane? know if you said Korean. You told them that I was Asian. And my last name is Oy, right? That's right. So, it worked out perfectly. That's right. I think Mike Schmidt called you right after the meeting and said, "What What are you talking about, dude?" That's right. Shane, of course, you and your brother have remained, you know, the I guess the the plan for you then you took the opportunity to exit, take some chips off the table, monetize that asset, but you were not satisfied with how you would Basically, in your mind that your business had not reached maturity. I mean, you had still a lot to you you were like Jim McHale. Jim wanted to sell, he wanted to exit, he wanted to buy his brothers out, he wanted to take some chips off the table. But Jim wanted to triple the size of that business, take it from 26 million, you know, to 75 million. And that that's kind of your philosophy, too, right? I mean, you've got a great team, you really want to grow that thing. Yeah, exactly. I mean, I I want to have my cake and eat it, too, right? And that's it's so rare that you have the opportunity to do that, but for I mean, for I think you nailed it, and I I would imagine most people who who run a pest control business would agree that or any business, for that matter, you really do care about the people who work for you. Uh there there may be a limit to how much you care about them in terms of what, you know, what the value is, but but in reality, you really do care, and you want to see them succeed. It's a really important part of I think it becomes a an important part of your identity and who you are as in in terms of a business owner. Um that that that was one of the things that was really attractive about Antisemitics was not only the opportunity for me to continue in in my brother, Ben, to continue to grow and learn in an organization like this, while taking some chips off the table, but um but also for our team to have this tremendous opportunity to grow and uh you know, and continue to expand their opportunity base. You know, I I mean, going into this year, I mean, we're already in Paul, I think I'm one of the buzzes, you brought it up uh recently around, you know, we're we're almost at the half-year point here, and you know, what happened in 2021 was this uh yeah, 2020, what happened is this huge ramp up towards the end, and and you had quite a few people kind of running for the exits around the election, and you know, we're we're going to be experiencing the same thing here. You know, I'm I'm fortunate enough to actually have three great teams um here where I had one great team at American, you know, but I mean, in the end, you know, as as people consider what to do on the second half of the year, you know, as acquirers, we only have so much bandwidth to actually action some of some of these deals, you know. So, you know, if I'm speaking with anybody, I encourage them that, "Hey, if if you're thinking about doing these things, you better get towards the front of the line cuz in the end, eventually, some folks are going to be left um you know, pushing those deals in the 2022 and um you know, but once again here with Shane and and the Northwest team and and the EnviroPest team, you know, we've we've actually got some pretty good resources to uh to help us do that. Matt, thanks for having me here at the Rollins corporate headquarters in Atlanta. Paul, thank you for being here. It's a it's a pleasure to have uh the Potomac Group uh in our fantastic broadcast studio. Yeah. Well, listen, Matt, um what I wanted to talk to you about today is this a general overview of what um what Rollins is seeing effectively in the M&A market and some of your strategies going forward. You know, for our audience, Matt Whiting joined Rollins, I guess in late 2013. Is that right, Matt? That's that's correct, Paul. And you're the VP of corporate development. Right. But my primary role is to help our business leaders to identify the companies that uh will make a difference in their businesses and then compete for them and and get them closed. You know, in 2021 now, we continue to see public equities trading at all-time high. We've got suppressed interest rates. Clearly, the consolidation boom has continued in the pest control industry. Um that makes it difficult to be a buyer, whether you're a Rollins or a Terminix or you're an individual going out to buy a business. Uh when you think about 2021 and 2022, given a lot of uncertainty on the horizon, where do you where where do you think valuations will be going? We've certainly seen a dramatic rise in in uh dramatic increase in um, acquisition valuations. Um, you know, that has forced us to make sure that that we do a good job of planning uh, and and really understanding on the front end what the core value of that business is so that we can uh, nurture that and make that uh, that grow uh, after we've closed. Um, I think we're we're at the top. But, I've been saying we're at the top for a couple of years. We We We both have. Right. And uh, and and each year it seems to get a couple of points higher. Um, I you know, with the fundamentals of of valuation that are the metrics that are provided by Terminix valuation, by our valuation, by Rentokil's valuation, public companies all all three. Uh, with public data that you can go look at. Um, you know, I think that those valuations really function as a cap. Mhm. And uh, on uh, on the M&A market. And um, you know, I think we've seen uh, uh, some moderation in the in the valuation increases that have been out there in the last few years in the market. So, I think prices will be stable for a while. Um, I don't necessarily see a downturn in in valuation coming. But, uh, you know, clearly uh, from a public market perspective, investors uh, seem to be more interested in investing in uh, electric cars and and what is it? Dogecoin? Exactly. Um, Patrick and I are joined today by Mike Givlin who runs a business called Certus. And they actually started um, they did their first acquisition out in the West Coast. So, I thought it would be a good opportunity to maybe bring him on, talk about that region for a little bit, and then after we have a chat with Mike, we'll come back for some Q&A, and then I have some other thoughts that I wanted to talk about with regard to evaluation and transactions. Mr. Givlin. Hey, Paul. How you doing? I'm doing well, man. I seen you twice now in a week. I just finally saw Mike Givlin in person last week after a long COVID break. Yeah, it'd been a long time since we seen saw each other in person, a couple of years. Absolutely. So, Mike, thanks for joining us. We're talking about the Northwest, but why don't we start out? Let's get a little history on you, and let's talk a little bit about Certus first. Sure. So, I started in the industry as I can't believe it's 25 years ago at this point. Started with my own business. We did specialty bird control. We didn't hang net. More kind of complex jobs using scare tactics, that sort of thing. Sold that business in 2007 to Steritech. Joined their their executive team. Stayed there from 2007 through to 2015, when we were acquired by Rentokil. Rentokil offered me a great job. Really liked the people, but it just wasn't the right home for me. I left there, went to Anticimex. I was the first person on the ground here in North America for them. Helped them build that business up over a 2-year period, and then decided it was time to part ways and and build my own thing. So, I left them in June of 2018. Took the summer off, hung out with my kids, which was great. Started fundraising for Certus in September of 18, closed that out in December of 18, and we made our first two acquisitions back-to-back in April 30th and May 1st of 2019, and we've been on a good growth trajectory ever since. We currently sit about 72 million in top line revenue spread across 10 states now. Um and you know, we really focus on kind of retaining people and doing the right things for the people that we we acquire and and just being kind of an open and transparent company and working to set ourselves apart from the other acquirers mainly on how we we we treat our people and our customers. What's it like when you're looking for companies to you know, at least start having a conversation with? What are what are some areas that you see yourself really aligning with sellers? So a couple of things number one is just the fact that we don't do synergistic layoffs. You know, we buy a company with 20 people. We we keep the 20 people. We don't do layoffs. That's definitely an area that resonates with a lot of sellers. Um and our ease of doing business. We've really worked hard to have a really smooth and easy transaction process. That helps with with the sellers as well. In terms of what we look for in a company, you know, cultural fit is a huge one, right? We want to make sure that they're aligned with us on how they want to treat their people and how they want to service their customers and and and all those kind of small little things that that really become big things when you you buy a company and bring them into the the Certus family. And are there certain business size do you have a do you have a minimum where hey, we really only have the bandwidth to work with certain size companies as far as acquisition? No, we've worked with with all sizes from you know, buying a gentleman's route who wanted to retire. He was a one-man show up to you know, millions of dollars in in top line revenue. We're we're kind of open to whoever's interested in selling at the time, uh, provided they they run a quality business. All right, Patrick. You know what I think? We've It's the end of the day Friday. We've run out of time, so maybe I'll give a different message at the end here. Um, we'll forget the slides. We'll get right down to brass tacks on on kind of a kind of a closing of Supernova. Um, a summary of all the different sessions. So, you guys are number nine. We've had a lot of different sessions with a lot of different questions, but you know, at the end of the day, um, Patrick, here in 2021, we've got transaction multiples at an all-time high. And I realize that a lot of people can or can't sell a business, right? If you're a young guy, you've got a $2 million business, unless you have immediate use for those proceeds, I don't It makes you puts you in a really hard position to sell. The message is out there for the people that may be a little bit up in years or individuals that have kind of counted on the paper wealth they have in their business, right? If you look at your business and you say, "I've got $30 million in value here." Until you monetize it, it's on paper. And when you look back from a historical perspective, that $30 million might be $10 million. At some point, we're going to hit that point again, and I feel like it's getting closer and closer. You know, I spent the week on the road last week, talked to senior executives at all the various different pest control players. We've done a lot of interviews this week on Supernova. And we've talked to a lot of the guys that are heavily involved in the acquisition programs there, as well as the executives. And like no other point in time in in in recent history, at least during the run-up of this period, have I heard from those folks that this is long in the tooth, and that at some point we're not going to pay these prices anymore. This is becoming a louder and louder message from the acquirers. I'm hearing a lot about why am I paying X amount for this sort of acquisition target when I could redeploy that capital into uh sales, marketing, advertising, infrastructure, and get a better return. In a very, very low interest rate environment, does is incentivize companies in to buy back shares and distribute dividends as opposed to make capital investment in their business. Making acquisitions is something they're rewarded for instantaneously in the publicly traded markets, but at some point when prices get high enough or too high, those rewards tend to disappear. So, that is my main theme in this entire presentation, that we are at a height right now. There's no reason to rush out to the door if you're growing your business. But, if you're at that stage in life where you think, you know what, I can't afford to not have these sorts of valuations, then it's something that you really need to think about, right? And Patrick, I know you have some questions, and so we'll get you back on here. This is a fancy uh You like that? I called you back. You probably walked away. There you are. What? Here I am. What kind of questions do you have at the end as you've been doing this throughout the the whole week? It's It's been a week, Paul. You've been my advisor for 10 years, and and space repetition, like you say things over and over, and you know this, they finally click. So, I I've heard it in the Boardroom Buzz, and I I listened to the, you know, my the podcast over and over, right? Because I have I have to. It finally sinks in. to. With with Supernova, the thing I've, you know, now going through this nine times, it's finally starting to click, right? Like I'm here I'm hearing you, and uh I'm glad we're going to be putting this together and and making this available for those that weren't able to make it today. I I I know in the past uh you've you've talked about Jim McHale, Shane Hoy, APM. Hey, we want to sell we want to sell we want to sell. And you said not yet. No, not yet. Uh I know especially with Jim being extremely competitive and wanting to sell at all-time high, right? Um So what's what's different? Well, you know, I mean Patrick, that's a great question. You know, over the course of the last four or five years, we've seen this run up in transaction multiples. And Patrick, I know you're getting very close to to Jim McHale. He's a fantastic guy. You chat with him often ever since he's been on the buzz. And he's a prime example. We worked with him for 10 years. And you know, of course Jim wanted to sell at the height of the market, but we weren't there yet. And you know, as we talked about on the buzz episode that, you know, for a couple of years, I told Jim relax, calm down, continue to grow your business, valuation multiples are continuing to increase. Shane Hoy, which was NTC Max's platform acquisition, Pro Pacific out on the West Coast, they engaged us back in 2015. Um Shane wanted to sell part of his business. And I said, "Are you an idiot? You got a great business here. Grow it. Transaction values multiples are going up." 2021 is really the first time in um It's the first time ever since I entered pest control where I'm telling everyone that if you are close to selling, now is realistically the time to do it. Could valuations run longer? Sure, you know. And clearly if I knew the answer that I wouldn't be having this discussion with you right now. I would be off on a yacht somewhere cuz I would have had a crystal ball. But we do see a lot of signs of of being late stage. And you know, Patrick, when I think about telling people to to to telling people to move if it's in the cards for them in the near term and now being the time to do it. Um, I'm talking about the year 21. If I'm talking about more acutely the time pressure within the year 2021, one of the things that I learned last year in 2020 is something that I never expected to to observe in pest control. You know, COVID pushed deals off from March through September for the most part. And so there were a lot of deals queued up in what was going to be a very big M&A year and they all got pushed off because of COVID. By the time we got to the end of the year, we had to get all the deals that had been pushed off and then new people came to the market and there wasn't capacity. These large acquirers have substantial financial wherewithal, right? They've got collectively billions of dollars in cash to spend. The problem is there's only a small handful of deal professionals, integration professionals, HR people, attorneys at these firms to execute these deals. And deals take time. They've got to be in queue and diligence periods. So, in 2020, we ran out of time. I think we did 12 transactions in the final quarter of the year. So, if you think about that just for our firm, that was an immense amount of transactions. Um, we were on I think five or six of Rentokil's eight transactions at the end of the year. And it got to a point in time where I heard things from acquirers around August or September which was, "Potomac, you have any more deals or going to the back of the bus now like they're going to 2021, there's no way we can do any more. That's it. We've already shut the books." This is going to be a busy year, you know, with the threat of taxes, which is really what concerns the majority of the industry. For me, it's more of a valuation issue. But for many of your colleagues out there, it's all about taxes. We're going to see a rush to the exits. We are seeing pipelines now that are three times larger than they were this time last year. And so, if you are going to do something this year, don't wait until the end of the year. Don't wait until August or September, which would be typical for owners that wait until the end of the season to get out to the market. You need to make a decision right now. Am I selling in 2021? If I'm not, that's great. Push it aside, do some long-term planning. If you are going to attempt to sell in 2021, you have to you've come to a fork in the road. Are you going to engage an advisor? Or you going to do it on your own? Either way, make that decision and get moving on whatever the choice that you make is. So, Patrick, I guess to answer your question, I have sounded the alarm more than I have ever historically just based on what we're seeing here in the market. It's true. I can vouch for it. You've said it You've said it over and over again. you and Yeah, that's right. Um all right. So, I know it it it's takes it takes more than just Potomac and your team to get a transaction across the finish line, right? We had Mike Stanzik on the Boardroom Buzz twice. We had Corey Vario on there, actually twice. Uh his own episode and then with Doug Stevenson. Yep. So, you bring you bring in other resources. Can you tell us more about that? Absolutely. You know, one of the things that we do here at Potomac is do because we focus on valuation and M&A and we don't do anything else, we need to bring in experts to assist our clients in maximizing their after-tax proceeds. You know, and taxes are a big portion of a transaction. And so, because we are not tax specialists, you know, we don't go out and hire CPAs or regular accountants, we go out and we find tax advisors and that's all we all they do. And as we talked about Corey Vargo earlier in the process, Corey is a guy that we've done hundreds and hundreds of millions of dollars of transactions with. We, Potomac, pay Wifely, the accounting firm, to bring Corey in and he's been involved in Jim McCall and Modern and Triple S and Innovative and Suburban up in New York and the list goes on. We also have recently been dealing with a company called BKD, right Patrick? Which is based out of actually Patrick's neck of the woods, well at least their pest control practice. So BKD is one of the largest accounting firms in the United States. It's the 12th largest firm. On a recent transaction, the Fahey transaction, we brought BKD in not only from a tax perspective, but a historical tax perspective to look at some corporate returns. Um And BKD not only gets involved in tax and you know, we still use Corey all the time, but BKD also has a pest control practice that they've dramatically ramped up in recent months. Not only do they do a general accounting and bookkeeping, but they get involved in audit, wealth management, a variety of other other services that you know, only the 12th largest accounting firm in the country could do. Further, they get involved in a variety of data analytics, a lot of stuff that you know, companies like Anticimex now are using Microsoft Power BI to analyze customer customer and other market data. So they've been a phenomenal resource and if you're looking for an accounting system or an accountant, I I can't recommend them enough. Um So Patrick, We made it, Paul. Ninth Ninth session of Supernova, nine regions. You've made You set aside a week to do this and to to share what you're seeing from from what's happened outside, right? Sometimes we can't see the forest for the trees. Love the industry and I can really just concerned about what valuations are doing within the industry. You're bringing this outside vision, what's going on. So I appreciate you making time to share it with us. Absolutely, Patrick. And you know what? Maybe it's a time to mention one more thing about folks out there. You know, if you work with Potomac, we we have made a recent move to bring people down to Puerto Rico. So, we've you know, COVID kind of shut things down. We've got our main office that covers North America out of PR. Patrick, you've dined down here with Franco the Mex. Um This is our main office. We are now conducting DD. Now that everything's opened up, we've got acquirers coming down here to actually conduct due diligence and we Potomac fly our clients down on our dime. If you want to get away from the office, if you want to conduct due diligence far away from any of your employees, we'll bring you down here. You come down even if you don't want to do DD, we'll bring you down for a meeting. Just a couple of weeks ago, we had the Fehi closing. That's Kyle and Kyle Vernon and his wife Hillary were down here. And we've what, maybe had a half dozen people down here over the last 2 months and look forward to seeing you down here in PR. So. I almost forgot. I apologize. Yeah, Frank I forgot how Frank likes to steal that camera spotlight. Indeed. Hey, I I do want to thank everyone for joining us today for Supernova. Again, thanks again Paul for for doing this for us. To continue the conversation with Paul and his team, I want you to go to potomacpest.com /connect. Again, that's potomacpest.com/connect. Thanks, everyone. Have a great weekend. Thank you for joining us and thank you Dylan Seals, Eric and Patrick for a wonderful production. Have a great weekend, everyone. Mhm.