Due Dilligence Tips and Tricks

October 02, 2023

by a searcher from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Austin, TX, USA

Hello everyone!

About to start a Due Dilligence Process for acquiring a pest control company and a cleaning service company...

Is there anything special I should be on the lookout for? Any tips and tricks to avoid rookie mistakes?

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Reply by an member
from Seton Hall University in Clifton, NJ, USA

When conducting due diligence for acquiring a pest control company and a cleaning service company, there are several things to keep in mind to avoid rookie mistakes. These are the following that I would follow if I were in your shoes. First, I should check for proper licensing and insurance before employing the services of a pest control or cleaning company to ensure that they are properly registered and insured. Second, I should inspect the company's sanitation and pest control practices to ensure that they follow proper cleaning and sanitizing procedures to reduce the number of microbes on surfaces. Third, I should evaluate the company's pricing and services by considering the services that make the most sense to provide based on the location and the most common pest problems there. Fourth, I should assess the company's reputation by looking for reviews and ratings from previous customers to get an idea of the company's reputation and check if they have any complaints or legal issues against them. Finally, I should consider the company's employees by checking if the company has well-trained and experienced employees who can handle the job efficiently and effectively. By keeping these factors in mind, I can conduct a thorough due diligence process and avoid making rookie mistakes when acquiring a pest control or cleaning service company.

Reply by a professional
from University of Nottingham in London, UK

\We performed the FDD on a deal in the sector (in the UK) earlier this year. Key things to look out for are revenue mix (contracted, recurring, on request) and customer concentration (change of control clauses in any contracts etc). On the cleaning side you might see a spike in revenue over FY20, FY21 and some of FY22 as a result of increased demand over Covid. Will be important to ensure that this is normalised when looking at historic EBITDA.

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