Arrow Exterminating has served Long Island and the New York metropolitan area, Bernard Stegman founded the company in 1947. His daughters, Jackie Grabin and Debby Tappan, eventually took over, leading the company based on the values their father established: do whatever it takes to help clients, be accessible and carefully treat pest problems.
The result? Arrow Exterminating became one of the largest pest control companies in the region

The Decision to Sell

Arrow Exterminating has had valuations and considered selling the business over the years, but it was never the right time.

This year, though, Jackie and Debby decided to sell, so they engaged PCO M&A Specialists, a pest control industry-specific exit-planning firm that has negotiated dozens of sell-side transactions at some of the highest industry valuations in history.

“Even though we thought we’d go longer, we’re the right ages (to sell),” Jackie says. “What with the pandemic, liability in every direction and the change in (presidential) administration, we knew if we waited it would be terrible tax-wise.”

The Experience

Jackie and Debby had been meeting with PCO M&A Specialists Managing Member Dan Gordon and his colleagues once a year for the past decade or so, incrementally improving their business based on his team’s recommendations.

“Every time they gave us wonderful advice — that we followed — about how to get the company ready for sale and changes we could make,” Jackie says.

For example, Arrow made a shift toward recurring revenue at PCO M&A Specialists’ urging. At one time the company’s ratio of renewable services vs. one-time work was around 50/50. Now one-time cleanups are down to around 10 per cent, which helped drive up the company’s value. Arrow also began focusing on quarterly rather than monthly service for residential clients, which improved profitability.

“Even when you’re not thinking of selling, still have it in the back of your mind how to prepare for the sale,” Debby says.

When Arrow’s owners decided to sell in early 2021, things moved quickly.

Although Arrow was not a client of PCO M&A Specialists’ sister firm PCO Bookkeepers, Arrow’s owners say other pest control operators may want to consider working with them to streamline the data collection process during the sale.

“They started working on our board book and we went back and forth through all kinds of data and information they needed to gather, and that took about three months,” Debby says. “We were happy with our accountant so we didn’t use PCO Bookkeepers, but it wouldn’t be a bad idea, so you know you have the records and the bookkeeping the way it has to be presented to a prospective buyer.”

The Sale

Around six years ago Dan gave Jackie and Debby a valuation. “It was a huge sum of money,” Jackie recalls. “These years later, we sold it for twice that amount.”

Needless to say, Arrow’s owners are pleased with the financial results of the sale, but it was about more than that for them.

“We knew we wanted a company that was going to be really good to employees and was going to treat customers well,” Jackie says, noting Rentokil was always at the top of their list of buyers.

Debby adds, “Rentokil has a great reputation and their values and their culture align with us completely.”

Both Debby and Jackie stayed on as consultants for several months and will see how the transition goes before stepping away.

“We couldn’t have been more thrilled,” Jackie says. “(PCO M&A Specialists) did a fantastic job. They got us a really great price. They were helpful every step of the way and were completely knowledgeable and patient. We couldn’t have asked for more.”

“Meet with PCO M&A Specialists long before you’re going to sell, listen to what they have to say and follow their advice.”