Harvest Partners’ acquisition of the Dwyer Group seemingly acted as a catalyst for accelerated consolidation among home service franchisors. The McLean Group recently represented Outdoor Living Brands on its divestiture of Mosquito Squad to Authority Brands, a portfolio company of Apax Partners. The Mosquito Squad acquisition represented the third home services add-on acquisition for Authority Brands (Homewatch Caregivers and America’s Swimming Pool being the prior two).
Given the fragmentation among home services franchisors, the market is ripe for consolidation. This trend provides smaller franchisors an attractive exit or partnership opportunity as well as the professional “backbone” of a larger franchisor to accelerate future growth. Notably, home services franchisors are fielding inbound interest from private equity firms seeking investment opportunities; however, many lack the size and scale that would identify them as standalone investment opportunities for the typical private equity firm.
In advising Outdoor Living Brands, The McLean Group evaluated potential offers from buyers considering acquiring its entire business as well as just Mosquito Squad, its largest brand. The McLean Group’s analysis ultimately found that in selling just Mosquito Squad, Outdoor Living Brands could unlock substantial value for its shareholders while enabling the company’s existing senior management team to continue to develop its four other brands: Archadeck, Outdoor Lighting Perspectives, Conserva Irrigation and Renew Crew.
The McLean Group franchising practice team anticipates that consolidation will continue to accelerate among home services franchisors as well as in in other franchise sectors, based on five other franchise M&A deals the firm closed in 2018.
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