For field service organizations looking to dominate in their industry, conquer customer satisfaction, and embrace the latest technologies, the process of an acquisition can be both an exciting and daunting one. On one hand, you are investing in the potential for growth and eliminating from your competitive set. On the other hand, as field service navigates a new service landscape, adding a team that has differing ideas, varying ways of work, and completely disparate technologies (or even paper-based methods) has the potential to cause major headaches.
Kevin Anderson, EVP of Active Pest Control, has practiced and nearly perfected the art of M&A. Active has become one of Georgia’s leading pest, termite, rodent, and wildlife control companies. Today, Active has over 45,000 customers and twelve offices located in Metro Atlanta, Athens, Rome, Columbus, Middle Georgia, and Sugarland, Texas.
Active has grown tremendously over the past few years, from a $4.2 million dollar business in 2006 to 21.4 million in 2018. Part of Active’s growth can be attributed to the fact that it has acquired four companies in the past four years. The company has a very particular operating process in addition to a well-defined and continually-improving technology strategy, so I was interested in Anderson’s take on how to streamline the M&A process. Here he’s sharing his top five tips to smooth some of the challenges of M&A activity.
1. Do Your Due Diligence
“Anyone considering an acquisition is doing due diligence in terms of reviewing financials, assessing customer lists, and so on – but we also do due diligence in terms of being strategic about the companies we are acquiring,” says Anderson. “Meaning, we look for companies that are well aligned to our operating environment, or that we think will be easy to transition.” When researching potential acquisitions, Active looks for companies that are marginally profitable that it feels it can quickly and easily amplify by layering on its paperless, digital-first technology strategy. So Anderson’s advice is that beyond an on-paper good fit, you need to think about how the operating conditions in present day can be translated to quick payoff when migrated to your environment.
2. Invest Time Up Front in Change Management
“You can avoid a lot of headaches with an acquisition by just investing a little time up front,” Anderson explains. “On ‘takeover’ day, myself, our owner, our COO, and our HR director spend the entire day on-site at the new business. We spend some quality time talking with the new team about who we are, how we do things, and what we expect of them.” Active is sure to discuss aspects of their company that they know the new team will be particularly interested in, such as benefits and incentives. The company completes all new-hire paperwork while on site, and introduces in person much of the change that will take place allowing all new employees to ask questions directly. “We are all short on time, but this initial investment in your new company is critical and will prove time well spent,” says Anderson.
3. Fast Track Technology Alignment
Active considers itself leading-edge in terms of technology adoption for the pest industry. The company is paperless, using WorkWave’s PestPac suite of cloud solutions for field operations, back-office, sales, marketing, customer experience, and reporting. Active is also in the process of rolling out WorkWave’s GPS solution. As Anderson explains, it’s important to waste no time getting the new business up to speed on the technology Active uses – particularly because this technology is what Active feels gives it a competitive edge. “With the technology we use, we are able to attain between $100,000 to $110,000 revenue per employee due to our operational efficiency. We employee 30 to 40 percent fewer employees as the average pest company our size, and we will be able to grow to upwards of $30 million in revenue without adding any additional administrative staff.”
So how does Active prompt its new team to adopt its existing technology? “The weekend before we take over, we input all of the new company’s customer information into PestPac,” he explains. “We run one month in tandem and audit at the one-month mark to ensure all new technicians are using the solution. By 60 days, we’ve abandoned whatever their previous processes were, be it another solution or paper.” This art of “ripping off the band-aid” if you will sets the expectation early on of what the new operating conditions will look like, and allows Active to catch quickly any new employees that are more resistant to the new ways.
4. Master the Art of Delayed Gratification
Another critical aspect of an acquisition is customer retention. In the pest industry, Anderson explains that it isn’t uncommon for customers to build loyalty to a brand and have emotions about a new company taking over. To maximize customer retention, Anderson suggests the approach of embracing delayed gratification. “We do early outreach to introduce ourselves to customers and get a feel for whether or not they have any concerns,” he says. “If they do, we personally go to visit them and offer their next service on us, explaining that we know we can make them happy and if for any reason they aren’t they can cancel afterward. Our retention rate is well over 95 percent.”
Anderson points out that another benefit of the company’s operational efficiency is the ability to leverage savings in examples like this – standing behind its services by offering a free trial. “I can beat my competition to any appointment, and our savings allows us to offer free trials or compete on price when we need to,” he says.
5. Put Effort into Maintaining a Cohesive Culture
Active maintains an advisory board that includes representation from all functions of the business, and incorporates new representation from each organization that is acquired. This helps to ensure that on an ongoing basis, the new businesses are in the loop and have a voice – things that are important to fostering a cohesive culture after an acquisition. “We want our employees and each of our locations to know they have a voice,” says Anderson. “The advisory board meets four times a year to discuss everything going on in the business so that everyone feels a part of decisions and is aware of the direction we’re headed. This helps to keep everyone on the same page.”