By Verne Harnish
Austin Clark, owner of Moxie Pest Control since 2011, has grown his Phoenix-based business through acquisitions in its niche. Since 2019, he and the silent partner who run the firm have acquired five other similar residential general pest-control companies. Along the way, they have boosted revenue from about $3 million to nearly $9 million annually, and grown to 125 employees.
Their first deal, in January 2019, was an acquisition of the Phoenix customer base of Croach Pest Control. Then it was Mike’s Swat Team in February 2020 and Eastern Arizona Exterminating in October 2020. In 2021, Moxie acquired Professional Exterminating, and it completed its most recent acquisition, 911 Bug Busters, in August 2022. They have applied a “buy and grow,” “buy and fix,” and “buy to enhance” strategy, depending on the target.
“Acquisitions four years ago were new to us,” says Clark. “We knew we wanted to grow. The first deal landed in our lap. They reached out to us. They said, ‘We’re divesting of these customers. Would you be interested in acquiring them?’ We said we ‘d love to.”
That deal, says Clark, “was the best first deal we could have done. It was so easy and so simple.”
Identifying the right targets
Seeing how that initial deal enabled the company to grow gave Clark and his partner inspiration. “After that, we started to get a lot more serious,” Clark says. “If we did this once, we could do it more than once.”
With that in mind, he and his partner acquired a list of all the residential pest control companies in Arizona. They called, emailed and texted the owners, following up with an acquisition packet.
“We feel we have a pretty good grasp on how to run, scale and have a great profit margin in the residential pest control market,” says Clark. “We normally are able to show people that.”
Saying no to a deal is sometimes as important as saying yes, they discovered. They scrutinized each potential target very carefully and, after doing due diligence, often determined that the target would not be a good fit. “Our ideal customers wouldn’t be the same,” Clark says.
For all of the deals, Moxie—a bootstrapped company—has relied on owner financing. “We didn’t have millions lying around to buy,” Clark says. “We weren’t interested in taking loans from banks or extended lines of credit.”
Clark and his partner approached their first potential target with an offer to pay them a percentage of collections from customers over a 24-month period. There was no purchase price. They would instead value the collections figure as a multiple, as in “We will pay you X percentage of collections from customers over a period of time.”
“It was nice for them,” says Clark. “They didn’t need the cash right then and there. It wasn’t a financial reason they were divesting. They could spend some of that income over a couple of different tax years. It probably got them a higher multiple than they could have gotten. We were able to do that with their own money and over time.”
This type of financing has been flexible enough to work for each deal. What has varied within that model has been the percentage of collections from customers paid to the owner, and the length of the earn-out or pay-out. “You might get your money over a 12-month, 18-month or 36-month period,” says Clark.
Moxie’s first acquisition went very smoothly, in part because both companies have a similar customer base and used the same software. “We didn’t have to deal with any cultural integration,” says Clark.
As the company did more acquisitions, it built an integration team to make it easier to blend cultures. “At Moxie, we have an incredibly strong , data-driven culture—a continuing education and continuous improvement-type culture,” says Clark. “We want everyone’s ideas. Everyone’s best effort.”
Moxie doesn’t always hold onto employees who have been with the acquired companies because of this. A change like having to adjust to driving trucks, rather than vans, is sometimes a deal-breaker for individuals who liked things the way they were. “People can be very resistant to change, even if it’s good, positive change,” he says.
Clark’s advice to other companies that want to use a growth-through-acquisitions strategy? “Know your ideal target, and come up with creative ways to finance deals,” he says. It’s a very accessible approach for small companies that want to scale up.