It’s time for another edition of “Value that company!”
Today, Pest Control - NW US!
$10 M ARR (24k customers at $100/q plus a little one-time)
95+% Customers are on cc autopay.
80% GM
$1.5 M SG&A
20% attrition in customer contracts can be replaced with part of SG&A
The challenge here is the zero growth unless additional capital is provided. So there are three options:
A) Sell to a strategic (another pest company). It’s well established in this industry that these companies can be had for $1.5x ARR so in this case ~$15 M
B) They could not sell, in which case I think @guessworkinvest makes a pretty compelling case below that the business is worth ~$30 M if they just sat and harvested the cash flow.
What does a monk, a maverick, the Illuminati, and a “cereal killer” have to do with mezzanine finance?
Time for a thread!
Late 1950’s : Dad is attending West High in SLC. Classmates include (soon to be) Gail and Larry Miller (below) who would go on to be long-time owners of the Utah Jazz.
More importantly, the woman who would become my mother was the year behind Dad in school.
60’s: Dad attends Columbia College in New York eventually earning a bachelors and PHD in Economics (no Masters)...
Why did I start a new, different job shortly after starting my mezz fund?
Related: Why am I biased against specialty retail?
Given the $SPG / $TCO news, it’s time for a mezz thread...
Today, the beginning of my mezz fund...
2012: I was helping my parents with their investments, and had developed the idea for what would become Mountain Mezzanine.
We’d do a traditional mezz fund, but go downstream in terms of check size, etc.
I loved this plan and was having the time of my life getting started.
Meanwhile, Dad was mostly retired but had taken a controlling position in a small specialty retailer (80-100 stores). They were struggling. Dad called one day:
You’ve voted! Now relax and enjoy another mezz thread!
Today’s topic is intercreditor agreements (You’ll understand the pic later)...
A few years ago, a small local PE shop calls. They had previously bought a small building products company and financed part of the deal with an out of state mezz group.
The company was trying to roll-out beyond their historical base, but things weren’t going well.
The mezz group was trying to run the old “lend to own” play...