“The Mayflower has landed.” That’s what Stuart Aust, founder of Bug Doctor in Paramus, N.J., said when the wire transfer completed, officially making his 25-year old family business the first U.S. platform company for Anticimex Group, the world’s fourth largest pest control company based in Sweden.
“It almost gives me the chills to be a part of something so major,” Aust says of the market entry of a new M&A player.
Before the August 2016 acquisition, Anticimex was not exactly on the radar of pest control firms in North America. But it has 85 percent brand recognition in Sweden and is known throughout Europe and the Asia Pacific region. The company has 129 branches in 17 countries — but it had not yet entered the North American pest control market, which is the largest in the world.
The Mayflower, as Anticimex referred to itself during the Bug Doctor deal, was more than ready to cross the pond and make an impression in the States. “We have the ambition to be the global leader in pest control, and to do that we had to be in the U.S.,” says Jarl Dahlfors, CEO and president of Anticimex Group.
Don’t mistake this desire to enter the market as a wish to stamp its brand on the U.S. pest control industry. That’s not exactly the case with Anticimex, which operates with a decentralized business model that empowers local owners to run their businesses with the support of its larger entity. Rather than a heavy-handed, helicopter parent company, Anticimex is more of a coach.
“Our strong belief is that pest control is local, and if you have a strong local brand that has been around for decades, it would be absolute stupidity for us to change that brand that has created such a strong and loyal customer base,” Dahlfors says, explaining why in spite of acquiring four platform companies now in the U.S., you still won’t see the Anticimex name advertised here. “We are very agnostic around the branding issue.”
Bug Doctor is still Bug Doctor. American Pest out of Fulton, Md., which Anticimex acquired from CEO Matt Nixon in fall 2016, is still American Pest. Viking Termite & Pest Control was made a platform company on July 5 this year. Its president, Ryan Bradbury, says, “We are in this business for the long haul. One thing that Anticimex values is the work that family businesses put into their companies and their communities.”
Then five days later, July 10, Anticimex announced its fourth high-profile acquisition that happened within five days of the Viking Pest deal. That was Modern Pest Services in Brunswick, Maine. “We more than doubled our size in the U.S. with the acquisition of Viking, alone. And then, adding another strong business to the group the week after is obviously very encouraging,” says Mikael Vinje, COO of Anticimex Group and president of Anticimex North America.
“We’re not on an acquisition spree,” Vinje quickly adds. “At the end of the day, we are in the people business, and it’s most important that there is a good cultural fit between Anticimex and the companies we partner with.”
A UNIQUE BUSINESS MODEL. So, what is the culture of Anticimex? Who is this international, private equity-owned firm that is staking a claim in the U.S. Northeast pest control market — in spite of no intention of spreading its brand name?
Anticimex calls itself the modern pest control company. It started by offering a “no bedbugs guarantee” to customers in Sweden in 1934 with an annual contract and fixed price. During that period of time in Sweden, nearly half of households were infested with bedbugs. (Anticimex literally means, against bedbugs.) By the 1940s and 1950s, the company expanded into rodent and insect control, and in the 1960s it made a move that today differentiates Anticimex from other global pest control leaders. It developed a relationship with the Swedish insurance company Skandia to provide pest control services to its clients. Today, Anticimex is the pest control company insurance companies turn to the most in Scandinavia.
This business model has yet to be explored in the United States. “That will clearly be a very attractive value proposition and growth venue in the U.S. going forward, and today we have a strong position in the Nordic marketplace due to our unique insurance concept,” Dahlfors says. “We are evaluating opportunities in every other market to see how that can be feasible going forward.”
Vinje adds, “We are very cognizant that this is a long-term process to educate both insurance companies and users how to obtain pest control through home insurance companies.”
Matt Nixon of American Pest says, “If it works [in the U.S.], it will be very interesting.”
Aust points out that Bug Doctor offers a similar insurance product focused on bed bugs for clients in larger high- and mid-rise buildings in New Jersey and New York. “We’ve seen great growth in revenue.”
GROWTH SPURTS. Initial expansion for Anticimex began in the 1970s. Anticimex in Norway launched in 1973. Maintaining its Nordic presence the next two decades, the company expanded its service offerings and began offering services to realtors and property managers. By the early 2000s, Anticimex established a presence in Denmark, Finland, The Netherlands and Germany. Then in 2012, Anticimex was purchased by private equity firm EQT, prompting a period of dramatic growth (see chart).
A strategic move in January 2016 to acquire SITA Pest Control extended operations into Asia. And last August Anticimex, “The Mayflower,” came to the States.
“Anticimex has been busy around the globe,” says Paul Giannamore, managing director of M&A and a strategy consultant at The Potomac Company. He was first introduced to the company in early 2014 during its move into Southeast Asia. “Getting into the U.S. market was important for many reasons,” he explains. “Number one, the U.S. market is the largest in the world, but two, for Anticimex to ultimately monetize the business they need that scale.”
For now, Anticimex is a different kind of global company of family-run operations, and this makes the culture unique and appealing to entrepreneurs who are proud of their greatest asset — their businesses — and want an opportunity to continue working in them. “If you are a regional player and you or your management team wants to participate [in the business] going forward, this could be an exciting opportunity,” Giannamore says.
That said, Anticimex is selective in its acquisition partners. “We spent time evaluating the market and right leaders and teams we could build a business around,” Dahlfors says. “When you have a business run by a local entrepreneur, you will do better than operating with a local manager who is controlled by a central office.”
This concept was very appealing to Aust, Nixon, Bradbury and the Stevensons at Modern Pest. Aust is Anticimex’s vice president of business development for North America, specializing in mergers and acquisitions. He also works in the Bug Doctor business daily. “I’m still here,” he says. “I’m still working. I’m the president and CEO.”
But, Aust is not owner. And that’s okay with him. “To be able to cash out, if you will, and continue doing what you are passionate about gives life a whole different perspective.”
Aust says he had been a “fly on the wall” watching other industry companies participate in M&A activity. “If you had asked me the year before, would I sell or was I looking to sell, I really wasn’t giving it a whole lot of thought,” Aust says. “But what happens in this industry is any of us independent owner-operators know the companies we are building are very valuable.”
Aust considered the future for his children who are involved in the business, and dreams he and his wife want to fulfill. The multiples were prime for selling, Aust relates. So he began to entertain potential suitors. Those included Orkin, Terminix, Rentokil and Anticimex. “I said to my wife, Donna, ‘I could see myself going with any of these four companies based on the meetings that we had.’”
The numbers were close, Aust says. “But I think Anticimex needed us the most; they were looking for that first platform company, so that was special and an honor,” he relates. “Mikael told me, ‘Stuart, you are so well connected in this industry…would you consider if you were to choose Anticimex spearheading M&A for us?’”
“That was intriguing,” Aust continues, noting that an opportunity to not only continue working in his business and the industry, but also to take his career to the next level, was a thrilling proposition. “I’m just really energized,” Aust says. “I’m excited for what the future holds.”
In many ways, Aust is in a period of reinvention. But importantly, his customers and employees at Bug Doctor recognize that it’s business as usual. As for his family, Aust says it provides more opportunities for his sons to work and excel in the business, or the flexibility to pursue their interests without the pressure of carrying on a legacy.
Currently, Dan Aust serves as director of business development and national accounts. Nick Aust is an account executive. Chris Aust works fulltime in summers, and the youngest, Mike, who is in high school, helps out in the office.
“We started this baby up 25½ years ago,” Aust says of the business he and his wife have worked in together. “It’s the American dream to be able to do something like this.”
And it’s Anticimex’s dream to take those businesses that have been thoughtfully developed with strong management and loyal customers and provide a “next level” option for growth. “Global reach with a local touch,” Dahlfors sums up.
EAST COAST EXPANSION. While Anticimex’s Vinje was in the U.S. with Aust, he met with Ryan Bradbury, president of Viking — which the industry would not officially learn about until this July’s deal. “No, it was not our plan to sell,” Bradbury shares a few days after the “ink dried” (or in modern M&A form, the wire transfer completed). “We did not go to market.”
But Viking was on Anticimex’s radar because it had all of the right things going: multi-generation family business; strong record of growth via several of its own acquisitions; good people; and longtime customers. Vinje reached out to Bradbury, who agreed to meet him to talk about their two companies.
“We were completely transparent with one another,” Bradbury says. “I probably didn’t think this was going to happen because it wasn’t our initial plan to sell. We said, ‘If we are the right fit, we can make something happen. If not, we are very happy to continue our business as usual.’”
But the idea of merging with a global company that shared the Bradbury family’s vision changed Plan A, which was to continue growing organically. “We felt we were a perfect partner,” Bradbury says, adding that he has a close relationship with Nixon and had some conversations about the Anticimex business model and opportunity.
“This will amplify what we can do,” Bradbury says. “We’ve been growing organically for 37 years, and we have been part of acquisitions as the buyer. So, it’s flip side this time.”
Now, Bradbury holds a leadership position with Anticimex North America while continuing work at Viking. For his people, the acquisition presents opportunities to advance at Viking. “If they want to get ahead they will be able to do so a lot faster than if we remained a mom-and-pop shop,” he says. “Technicians will have opportunities to be supervisors or local managers. Local managers will have opportunities to be district managers — and all the way up. We are really going to look to aggressively grow our company in our current marketplace and in other areas.”
As for Bradbury, he’ll head up acquisition efforts for Viking. “I enjoy that type of work,” he says. “My phone is already ringing.”
The week following Viking’s announcement, Anticimex announced the acquisition of Modern Pest Control in Maine. This aligns with Anticimex’s strategy to establish platform companies in the United States, which then will acquire “bolt-on” companies that take on those brands. The platform companies will retain their names, logos and overall identities. The bolt-on companies will become part of those platforms, and territories will expand in that manner.
Anticimex is particularly focused on the eastern United States. “We find the mid-Atlantic region of the U.S. to be very attractive because a huge amount of the U.S. population lives there, it’s relatively wealthy and it is well-penetrated in terms of pest control,” Vinje says. “There’s a demand for both commercial and residential pest control, so it fits our heritage, our capabilities and our geographical strategy very well.”
Anticimex is not looking for “national championship” or “national coverage,” Dahlfors says. “Our strategy is to find really strong local champions and support them and enable them to become even stronger in their local and regional marketplaces.”
IMPACT ON U.S. MARKET. So, what does it mean for the pest control industry to have a new player involved — a global company that’s interested in acquiring entrepreneurial-minded owners who are looking to stay on board? It goes back to the important role that local operators play in a decentralized business model. Says American Pest’s Nixon, “I’m 41 years old and I want to stay involved, keep working.”
What is similar about the way Anticimex is moving into the United States and the way other national brands already established here have grown is the model of acquiring platform companies that then acquire tuck-in businesses that are smaller. “So in a way, the tuck-in acquisitions are similar among the acquirers,” Giannamore said.
So far, Anticimex has completed two bolt-on acquisitions. The first was R&K Pest Control, based in Westchester, N.Y., in June 2016. Then came Northern Va.-based GreenStar Termite & Pest in December 2016. Those companies will integrate into the Bug Doctor and American Pest brands, respectively. All of them are now part of Anticimex, but the changes in name and logo happen at the bolt-on level when those smaller and mid-sized businesses are acquired by Anticimex platforms.
Giannamore adds, “When it comes to the platform acquisitions, that is where things get different [among the key national acquirers]. Anticimex is more inclined to want participation from the sellers and more inclined to really focus on the actual participation from management team, whereas other guys can get away with saying to the seller, ‘You want to be gone the day of close, that’s fine.’”
Though, that’s not always the case. It depends on the scenario. Chuck Tindol who in February 2017 sold $27 million Allgood Pest Solutions headquartered in Atlanta, Ga., to Rentokil says, “I continue to work with Rentokil and started on July 1 as the Termite Line of Business Manager for North America.” He says his new role will include working with Dave Fisher, who is senior vice president of operations, and John Myers, CEO.
While industry consolidation at the PCO level provides new opportunities for outgoing company leaders, as is the case with Anticimex, it can infuse the pest control industry with new leaders who bring with them different perspectives and fresh ideas.
“When you’ve got an Anticimex joining the ranks of Rentokil, Orkin, Terminix, Ecolab, Massey, Arrow and Cook’s, it brings another strong player into the market and it’s great for the industry,” Aust says. “As the NPMA saying goes, ‘a rising tide lifts all boats.’”
Aust said Bug Doctor has already benefited from the use of SMART technology — high-tech digital traps, sensors and cameras. SMART is a digital, non-toxic product line that has helped the company boost new pest control sales (see “GETTING SMART” below). “We were able to ride that wave and our prices for termite jobs doubled, tripled,” Aust says. “We were able to build some serious value.
“It’s the big companies that can really pave the way for smaller companies,” Aust points out.
Consolidation will continue if you question most industry leaders on the topic. Anticimex’s goals are to grow in existing markets and to establish the company in new markets. In 2016, it acquired 31 businesses across the globe — including a number of high-profile U.S. transactions — according to its annual report. Meanwhile, PMPs in the position to sell are watching the multiples wondering, “Is now the time?” Aust says now certainly isn’t a bad time. Like the Kenny Rogers song, The Gambler, “you’ve got to know when to hold them, know when to fold them. “Everything in life is all about timing,” he says.
Pest control business owners are calling Aust now that he’s heading up M&A in North America for Anticimex and asking, “Is now a good time to sell?” He says, “It’s opening up the conversation and I’m able to explore that with them. Having sold, people feel very comfortable talking to me about their succession plans. I’ve never had so many people tell me their age without me even asking! Guys are saying, ‘I’m 50 and I want to sell in five years.’ Or, ‘I’m 57 and in another two years I’ll be ready.’”
Aust actually stops the interview to receive a call on his cell phone from a potential seller. “See?”
“I think the mergers and acquisitions business and consolidation in our industry is probably at an all-time high based on the 25 years I’ve been in it and watching,” Aust says.
WHAT’S NEXT? What’s Anticimex’s next move? Will it eventually introduce its brand name to the U.S.? And what about the service model of selling pest control through insurance providers? How could the SMART technology that positions Anticimex as more than just a pest control company, but a tech services firm, change the face of the industry here in the U.S.?
For now, Anticimex has no plans to launch a countrywide Anticimex brand campaign or require that acquired companies take on its brand presence. That simply goes against its decentralized business model, and that has been serving the company quite well. “Only if it made sense for customers or employees that we have a coherent brand strategy would we consider it,” Dahlfors says. But again, he calls their branding mindset “agnostic” and emphasizes that the reason for acquiring the platform companies it chose was their brands. So why mess with a good thing?
Bug Doctor chose to adopt “A part of Anticimex” in its tagline. Nixon, who will keep American Pest’s brand as is, noted that Aust is “making a local decision that best suits his brand.”
What will be invited into these North American Anticimex operations are best practices ranging from pricing to routing to using technology. “We set up best practice sessions and there are benchmarking exercises going on and it’s thereby creating a very strong pool effect from our local leaders to learn more and share the good, the bad, what works and what doesn’t work that well,” Vinje says.
Anticimex will continue supporting its 128 branch managers with a mobile-enabled portal that provides descriptions and best practice guidelines of how the company manages and develops its business. The portal is not yet completed.
Expect the digital model that Anticimex offers in its Nordic markets to be available here. “We are still waiting on the last couple of certifications and bits and pieces,” Dahlfors says. “Our current teams are already experimenting a little bit internally, but we are not out there yet to market it to customers [in the U.S.]. It’s very much looking forward.”
That looking forward sentiment is across the board — shared by owners of platform companies acquired by Anticimex, and the industry that’s watching what will happen next with the addition of a new global entity in the States. Bradbury says, “I think some really big things are going to happen.”
The author is a frequent PCT contributor and can be contacted at firstname.lastname@example.org.