Why We Sold Pest Pulse To ServiceMaster
At the end of May 2019, Pest Pulse was acquired by ServiceMaster. Less than two years old and barely six months after launching our first customer, we successfully sold our company to one of the largest pest control companies in the world.
Sounds like something to celebrate and shout about. But we didn’t. Nothing changed. There was no big company celebration. More like about-time-that-deal-closed-so-we-can-fully-focus-on-building-this-company.
You see, we didn’t have any of the normal reasons for selling your startup:
- The money was life-changing - I wish
- Market rate salary and perks - see answer above
- Working a slower normal job sounds nice - we’re only getting started, we’re speeding up
So why did we sell at all?
What is Pest Pulse
Before getting into the sale, it’s probably worth saying what Pest Pulse (www.pestpulse.com) actually does. We use IOT connected smart devices and software to offer commercial customers a technology-led pest control service. Our smart devices monitor our customer sites 24/7. When there is a trigger, this allows us to dispatch a technician quickly when actually needed. We don’t have to go onsite as much as the devices are permanently monitoring for activity. When we do go onsite, the treatments are quicker and more targeted. Crucially this is all for the same price as traditional pest control services.
Introduction to ServiceMaster
Back at the start of the company, it was just the founders of Tim O’Toole, John O’Gara, Wassim Magnin and myself. We, like everyone in the pest control industry, know about ServiceMaster (and their main brand Terminix). After all, they generate $2 billion in pest control revenue annually. However, we thought it was quite strange that they knew about us! Their Innovation Center contacted us in April 2018 to be part of Start Co’s Launch Delta accelerator in Memphis that they were sponsoring.
We were pre-launch at this stage, still building out our product, proposition and pest control partner network. There was a lot we could learn from being on the inside of an enormous pest control company. We packed our bags (and prototypes) and went to Memphis for the summer.
We took enormous value from our time with Start Co and ServiceMaster, everyone was incredibly open with us. We got a much deeper understanding of the pest control market and opportunity within it; it helped to further refine and validate our strategy and roadmap.
Now back in our home markets of UK and Ireland, we were gearing up for the launch of our pest control services with our first customers. (For what it’s worth, even though it’s off-topic, that has exceeded expectations and we’re now growing quickly, servicing many national brands and commercial clients across the UK and Ireland.)
We were also moving towards a needed fundraising round. We had raised a small round previously from wonderful investors (1000 thank yous for all your support). Financially though, we needed to raise more money to continue on this path.
Fundraising is a slog, it always takes longer than expected and is hugely distracting. We were lucky; we got a lot of funding interest, from both existing and new investors. We were humbled to receive great offers that would have seen Pest Pulse through its next phase. I must admit that being a venture-backed pest control company had a certain ring to it.
Does a competitive process lead to a better offer? In our case, yes. In all cases, yes.
As part of our fundraising process, we were still talking with ServiceMaster. Initially we were looking at a partnership where they would fund our R&D. Ultimately we realised that set up wouldn’t work as it would likely result in Pest Pulse building technology that would be great for ServiceMaster (but not necessarily staying true to Pest Pulse’s vision). Equally, Pest Pulse’s technology (smart devices, IOT platform and mobile/web apps) is only part of the value. Even more important is using the data generated to deliver a better pest control service, for example, risk-based deployment of resources to customer sites that need more attention.
After much brainstorming, the offer on the table from ServiceMaster was an acquisition, with outside investors paid out upfront and insiders tied to an earn out. Also a continued funding and control commitment to Pest Pulse to build out its offering as it saw best.
The Right Opportunity With The Right Company
We know ServiceMaster and the team. They live up to their mantra of “We Serve, We Care, We Deliver”, we have seen that cascade through the organisation.
What was more surprising for us is their vision for the pest control industry and where they see it going. The more we talked, the more overlap we found between what Pest Pulse is doing and planning and what ServiceMaster see as the inevitable way the industry is going. “We’ve been trialling something similar.” Or “that sounds great, have you thought about adding this part on”. Not just words, they've already invested in an internal Innovation Center to help deliver the future sooner. There was a lot of directional alignment already in place. Doing a deal became a lot less daunting.
Ultimately a key aspect in ServiceMaster’s offer was their desire for Pest Pulse to keep growing in the way the founders saw best. They went to great pains to iterate that they don’t want to distract us from delivering our strategy. They really want our approach to succeed and to help us in doing that when needed. Their belief shown in our team was hugely appreciated.
The deal crucially opened up access to ServiceMaster's on-the-ground technician infrastructure and customer base, for when made sense.?? ServiceMaster are already a household name in the US with Terminix and Copesan. Recent brand acquisitions in Europe such as Terminix UK (UK), Nomor (Sweden) and Pelias (Norway) would give even more opportunities to deliver a compelling offering for customers for all entities in the ServiceMaster family.
We realised we could team up with ServiceMaster without compromising our vision. It was a perfect tie-up for Pest Pulse. After the usual painful due diligence process, we had sold Pest Pulse.
Selling Too Early?
Some of our investors were overjoyed; they got paid out nicely on a quick return. Some thought we should have stayed fully independent to see where that journey took us. Pest Pulse does epitomise a challenge, particularly in Ireland, that startups with early traction struggle with - selling too early.
You may have come to that conclusion already. It was certainly a question that was at the forefront of our minds as we picked our future path. We have a unique approach to a problem that a lot of commercial customers have with the way pest control is done today. We have a great team to deliver the product and we have investors willing to back it. Everything seems to be in place.
What do we need ServiceMaster for? It’s simple really. This deal gives us the ability to put together an even more compelling offering for customers, faster. We can combine Pest Pulse’s technology and proposition with ServiceMaster’s infrastructure and deep pest expertise. Being part of a company this size gives us access to resources that we otherwise wouldn’t be able to get. We can tackle problems at a broader scale than ever before. The opportunities are huge and that’s very exciting.
It’s been four months since the deal closed. I can’t definitively say what the right decision was. We may never know. What I can say is that being part of ServiceMaster has been great for Pest Pulse so far. The support has been wonderful, the opportunities we’re exploring are game-changing.
Crucially, it’s better for our customers too. This deal doesn’t compromise on our vision or promise. Instead, it accelerates it. As a Pest Pulse customer, you’re going to get better support, better features, and most importantly, even better pest control results!