You’ve built your pest control company from the ground up, and whether you’ve just completed your first year or are a seasoned pro with a decade under your belt, it’s essential to know how much your business is worth.

Many large pest control industry brands are expanding their service areas and offerings by acquiring smaller businesses, with Rollins, Rentokil, and Anticimex topping the list of active buyers in 2023. This means that a strategic approach to growing your pest control business and increasing its value could land you an amazing deal.

We’ll show you how to value a pest control business, along with steps you can take to increase the value of your company to get the highest possible offer.

How to value a pest control business

Valuation is a way to estimate business worth, and there are two primary ways to value a pest control business: seller’s discretionary earnings (SDE) and earnings before interest, taxes, depreciation, and amortization (EBITDA). SDE is more commonly used to value small businesses.

Valuations also include multiples, which compare a business’s fair market value to a financial metric like EBITDA or SDE.

SDE

This measures a business’s earnings before the owner’s salary, non-cash expenses, discretionary expenses, and non-recurring items. Pest control businesses typically see a valuation multiple of two to three times SDE.

SDE = Pre-tax Income + Owner’s Salary + Non-cash Expenses + Discretionary Expenses + Non-recurring Items

SDE metrics

• Pre-tax income: Your total business earnings, including all costs except income taxes.
• Owner’s salary: This is the owner’s salary as based on the market rate, including payroll taxes.
• Non-cash expenses: These expenses are the depreciation and amortization (or reduction in value) of tangible and intangible assets.
• Discretionary expenses: These are expenses that aren’t required for the business to operate, such as personal travel expenses, meals, and entertainment.
• Non-recurring items: Any one-time expenses that you don’t expect to continue paying, such as consulting fees.

EBITDA

This measures a company’s operating performance and ability to create cash flow. Usually, pest control businesses see valuation multiples of three to four times EBITDA. You can calculate EBITDA with the following formula:

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

EBITDA metrics

• Net income: The company’s earnings for a given time frame, such as a quarter or year.
• Interest: The interest paid on money borrowed to operate your business, such as credit card debt or bank loans.
• Taxes: The amount of taxes your business pays depends on where it’s located.
• Depreciation: The expense associated with the deterioration of your business’s tangible fixed assets, such as wear and tear on vehicles.
• Amortization: The expense associated with intangible assets, like patents or even brand reputation and competitive advantage, that have a limit to how long they remain useful.

What impacts the value of your pest control business?

Now that you have an idea of how to estimate the value of your own business, you may wonder what impacts the final sale price. Let’s take a look.

Business model and services

Your business model, including which services you offer, can greatly impact the value of your pest control company. If your business model focuses on earning recurring revenue from long-term contracts or seasonal subscriptions, your profit is viewed as more stable and your business is valued higher.

Offering additional pest management services, like termite control and bed bug infestation treatments, grows your customer base and adds revenue streams.

Location

If you operate in a large city with lots of closely packed houses or in a warmer location where pests tend to thrive, chances are you’ll see higher valuation numbers.

Other location-based data that can affect your pest control valuation includes your market size and number of competitors. If you lucked out and are one of the few pest control companies in your area, your business earns a higher value thanks to its competitive advantage.

Assets and employees

Tangible assets, like sprayers, foamers, and other equipment as well as company vehicles and owned property, are also considered when valuing your business.

If your tangible assets are well-maintained and in good working condition, they’ll likely increase your company’s value. On the other hand, old and obsolete assets could reduce the value since potential buyers likely want to account for the cost of replacements.

Your employees and their expertise are intangible assets that can also impact your overall business valuation. Skilled technicians are essential for providing high-quality service, and training employees in customer service best practices can also improve your customer retention and referral rates.

Plus, multiple pest control businesses reported that finding reliable, skilled employees is a challenge in 2024, so it’s no surprise that your workforce can have a considerable impact on your company’s value.

Regulation compliance

Legal issues can put a damper on your business valuation. Buyers will more readily consider companies that have a clean track record for adhering to industry regulations. That’s why it’s worth investing in employee training and pest control software that helps you stay compliant.

Brand reputation

Marketing your brand by growing your customer base, strengthening your reputation, and protecting your market share can also impact your pest control business valuation.

On the other hand, a poor brand reputation and negative reviews can drastically reduce your business’s perceived value—even to the point where buyers are hesitant to make an offer due to potential revenue risks.

Revenue growth

Showing that your business can grow revenue consistently year over year makes a compelling case to buyers. This tells them that your business not only is profitable but also has a steady stream of income thanks to a strong sales pipeline, large customer base, and great brand reputation.

Operational efficiency

When your company operates efficiently, buyers know it won’t suddenly fall apart once a new business owner takes over. Operational efficiency often impacts your profit margins, but it doesn’t just mean you’ve got a handle on your cash flow. Buyers also look at the following:

• Whether you use technology, like pest control software, to support your team
• How streamlined your workflows are, from initial customer outreach to service follow-ups
• Whether your team is well-trained and what ongoing pest control technician training you offer
• How well your business operates when you, the owner, aren’t around

Businesses with good operational efficiency also have higher levels of customer satisfaction. This impacts brand reputation, customer churn rates and retention, and other metrics that also influence your business value.

How to increase the value of your business

After analyzing recent pest control mergers and acquisitions data, business analytics and SEO company First Page Sage found that a majority of buyers want to buy businesses that offer a strategic, not financial, advantage. For example, the buyer may look for businesses offering specialized pest treatment services that the buyer’s company doesn’t currently offer.

That said, strengthening your finances is still a great way to increase your pest control business valuation. Here are five strategies to help you catch the eye of potential buyers and receive a higher offer:

1. Expand your services

Diversifying your service offering beyond general pest control treatments and prevention unlocks new growth opportunities and revenue streams. It also reduces the potential risk of relying on a single customer base.

Of course, it’s not always feasible to expand—especially if you’re a pest control startup. No matter how long you’ve had your service business, it’s best to develop a plan that plays to your strengths and market opportunities. While planning what types of pest control services to add, ask yourself these questions:

• Do you have any unique value propositions, like exclusive contracts or technician skill sets, that your competitors lack and are in demand?
• Can you secure long-term leases or contracts to stabilize your expenses and revenue?
• Are there any customer needs that your competitors currently don’t meet?
• Are there any complementary services that your competitors don’t currently offer, such as landscaping or sanitation?

2. Improve operational efficiency

Streamlining your workflows doesn’t just help your day-to-day workload and expenses—it also impacts your business valuation. Buyers want to see companies that operate smoothly, even when the pest control business owner isn’t around. 

Improving your pest control business operational efficiency should include these steps: 

• Document all systems, processes, and workflows to make it easier for your business to scale and add new staff.
• Invest in technology like pest control software to automate and streamline repetitive tasks such as scheduling, route planning, and customer communications as well as manage inventory to avoid waste and carrying costs.
• Train your employees to enhance their expertise and build new skills, and purchase assets that increase productivity.

All of these investments not only impact the value of your pest control business but also set you up to provide the best possible customer service.

3. Build a strong brand reputation

Creating a strong brand reputation is challenging, but it’s well worth your effort. After all, a brand that’s well-known for excellent service commands a higher valuation. 

Start by developing your online presence in the following ways:

• Design a pest control website that’s optimized to capture leads and educate customers.
• Optimize online business profiles, like Google My Business and Yelp, to improve your pest control marketing.
• Invest in pay-per-click ads on sites like Google and Facebook to reach new customer segments.
• Implement pest control review strategies such as following up after visits and asking customers to rate your service.
• Prioritize local search engine optimization (SEO), which helps customers find you when they search for pest control services near them.

Here are a few additional ways you can build your reputation by balancing value with a healthy profit margin:

• Use competitive pest control pricing strategies to offer value to customers and reinvest in additional marketing or assets.
• Engage with customers on social media, at in-person community events, and on review sites.
• Offer referral incentives such as discounts, gift cards, or free treatments.
• Use pest control customer relationship management (CRM) software to gather customer data and personalize your interactions and offers.

4. Streamline operations with pest control software

Transferability between you, the current owner, and a new owner is a key concern for business buyers. One easy way you can reduce your business’s reliance on you and streamline your business operations is to use pest control software like GorillaDesk.

Here are some ways GorillaDesk helps your pest control company operate smoothly:

Scalable systems

GorillaDesk’s route optimizer builds the most efficient routes in just a few clicks (Source)

Use GorillaDesk to tackle admin tasks like route planning, scheduling, and technician dispatching. The software also syncs routes with every driver in real time, so any emergency updates are reflected in the day’s schedule.

Instead of adding more phone operators to handle incoming service requests, GorillaDesk effortlessly scales with your business—no additional training or significant expenses needed.

Automated tasks

Set up GorillaDesk to send invoices and reminders at a frequency that works for you and your customers (Source)

Tasks like invoicing and following up with customers about scheduled appointments are necessary, but they quickly eat away at your efficiency. GorillaDesk automates and streamlines these tasks so you can continue to offer the best possible service without working overtime to send an invoice.

Self-service customer portal

Customers can select services and schedule appointments with GorillaDesk’s customer portal (Source)

Over half (61%) of consumers demand modern ways of interacting with home services companies. Offering a customer portal where they can make service requests and pay their bills improves satisfaction and may even lead to a long-term customer relationship.

GorillaDesk’s customer portal empowers your customers to make their own service requests and decisions. Here, they can view all active estimates, digitally sign to get things moving, and make online payments. 

Transparent communication

Prioritize transparent communication with text updates that show ETA and current location (Source)

Along with appointment confirmations and reminders, GorillaDesk makes it easy for technicians to text customers and let them know they’re on the way. 

You can also schedule automated follow-ups for a certain number of days after a completed service. These follow-ups are the perfect time to thank customers for their business and request feedback.

Reporting and analytics

Set goals and make smart decisions with GorillaDesk’s sales forecasting, invoice, and other reports (Source)

Analyzing data is key to improving your business valuation. It helps you spot areas for improvement, growth opportunities, and insights into your current strengths.

GorillaDesk includes multiple types of reports that help you visualize this data and make sense of it. These include invoice reports, service lookup, sales forecasting, and overdue accounts. Additionally, the material use report helps you remain compliant if your state requires chemical usage logs. 

5. Maintain financial health

Getting your financial house in order makes your business even more appealing to buyers. It also reduces potential headaches on your end when it comes to analyzing your cash flow and understanding your profit margins.

Some important areas to consider when cleaning up your finances include the following:

• Financial statements: Double-check that the past three to five years are accurate and meet accounting standards.
• Revenue streams: Keep detailed records of your revenue, especially recurring contracts—or hire a professional CPA to do this for you.
• Expenses: Reduce unnecessary expenses and improve your operational efficiency to increase your pest control business profit margin.
• Personal vs. business: Separate your personal and business finances by opening a business bank account.

It’s also a good idea to hire an accredited third party to value your business. Think of this like a second opinion from a doctor; it helps you make the best decision going forward. This will also help you to avoid low-ball offers that don’t fairly value your business.

Improve your business valuation by optimizing efficiency with GorillaDesk

Buyers are looking for pest control companies that not only are efficient and profitable but also offer a strategic benefit to the buyer’s existing portfolio. With a strategic plan, you can get a higher offer for your pest control business by building a strong brand reputation, expanding your service offering, and improving operational efficiency.

Pest control software like GorillaDesk streamlines your operations through client management, workflow automation, and payment features. These features improve your profitability—allowing you to expand your services, grow your business, and attract higher offers from potential buyers. 

See how GorillaDesk can streamline your operations and improve your business value; start your 14-day free trial today.