PEST BROKER

VALUATION

Determining the Fair Market Value of your business.

A valuation is an overall analysis of the business’s tangible (vehicles and equipment) and intangible (Customers and Accounts) assets. Business value is not three times (3X’s) revenue as I am often asked, nor is it .50 or even $1.00 for every dollar of revenue. It’s all about the Accounts and tangible assets, comparable market pricing of the services, expenses for costs of goods sold (product inventory), labor, profits, years in business, and location (supply and demand). There is NO value on one-time (1X) services unless the broker knows the industry well and can formalize that revenue into an Account in a justifiable way to the Buyer.

There are four (4) basic approaches to valuing a service business.
 • EBITA or EBIT
 • Income approach
 • Asset approach
 • Market approach


The Asset & Market approach is more widely used in the valuation determination of a pest control, termite, lawn & ornamental, & lawn maintenance, service businesses. The Asset approach analyses value on both tangible and intangible assets of the company. The Market approach derives through complex formulas; gross sales, net earnings, and asset value, specific to the industry, which are the core ingredients to analyzing a pest control company’s Fair Market Value (FMV).

To perform a Valuation the Business Owner will need to provide financials, tax returns, a breakout on the stream of revenue, and a list of all vehicles and equipment to be included as follows:

  1. Last three years’ financials; profit and loss statement (PL) and the balance sheet (BS)
  2. A YTD financial for the current year (PL and BS)
  3. Last Year’s tax return
  4. Breakout on the Customers and Accounts to include frequency of service, cost of service, and zip codes.
  5. List of all Vehicles (Year-Make-Model-Mileage) and large Equipment (rigs, foggers, dusters, heaters, etc.)
  6. Year Business was Established.

Accuracy is critical to the process as You, the Owner, would not want to miss out on any additional value that may otherwise be missed, therefore, all of the items listed above are required to complete a valuation. 

When a business owner has spent years building their company it is imperative that the professional you hire to represent your business spends time identifying and considering ALL aspects of your business value. A local broker may not be experienced or familiar enough with your industry, often resulting in valuations that are higher than your market will bear; whereby everyone will look but no one will even attempt an offer.

If YOU are not ready to SELL, Don’t!
You are no good to the Broker, the Buyer, or Yourself if you are not ready!

Pest Broker Acquisition Worksheet

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