Buying a Pest Control Route or Customer List
Not every pest control acquisition involves buying an entire company. Sometimes an owner who is retiring, relocating or narrowing their focus sells a block of customer accounts, often called a route, to another operator. For an established pest control company, a pest control route acquisition can add customers in a defined area without taking on a second business’s entity, staff structure and history. It also brings its own risks, since the value of a route depends almost entirely on whether the customers stay.
This article explains general considerations for established, operating pest control companies buying routes or customer lists. Licensing, contract assignment and customer data rules vary, and buyers should work with qualified attorneys and accountants. Nothing here is legal, tax or regulatory advice.
What a Route Purchase Typically Includes
- Customer accounts with service history, frequency, pricing and contact information
- Service agreements, to the extent they can be assigned
- Sometimes related termite warranties or renewals
- In some cases, vehicles, equipment or the services of a technician who serves the route
- Seller commitments such as non-competition and help introducing the buyer, where enforceable
Route Purchase vs. Company Purchase
Buying a route is generally an asset purchase of selected accounts. The buyer typically does not acquire the seller’s entity, which may limit exposure to the seller’s past liabilities. But the buyer also may not receive the seller’s licenses, staff or systems, so the buyer’s existing company must be able to serve the customers. Buyers acquiring an entire existing company should see our article on pest control add-on acquisitions.
Evaluating Customer Quality
Because a route is essentially a group of customer relationships, buyers focus on:
- How long customers have been with the seller and how often they cancel
- Whether customers pay automatically and on time
- The mix of residential, commercial and termite accounts
- How customers are geographically spread relative to the buyer’s existing routes
- Whether pricing is in line with how the buyer plans to operate
Our guide to pest control recurring revenue explains how retention is evaluated.
Retention Risk and Transition
Customers may cancel when their provider changes, especially if they were loyal to the seller or a particular technician. Careful communication, consistent service and keeping familiar pricing during the transition can help. Some buyers ask the seller to introduce them personally to key customers.
Structuring the Price
Because retention is uncertain, route purchases sometimes include terms that adjust the price based on how many customers remain after a defined period, or pay part of the price over time. Whether such terms fit depends on the transaction and any lender involved. See our article on pest control seller financing and earnouts.
Due Diligence for a Route
- A customer list with service history, pricing and payment data
- Billing records reconciled to deposits
- Sample service agreements and their assignment terms
- Termite warranty records for any warranties included
- Any complaints or disputes involving the accounts
Our pest control due diligence checklist includes related items.
Financing a Route Purchase
Lenders evaluating a route acquisition generally look at the buyer’s existing company, its cash flow and its ability to serve and retain the acquired customers. Whether a particular route purchase is eligible for SBA-backed or conventional financing depends on its size, structure, program rules and lender review. See our article on SBA loans for pest control businesses.
US Professional Funding helps established pest control companies evaluate financing for acquisitions of existing customer accounts and companies. Learn more about our pest control acquisition financing.
