Paul Giannamore, managing director at The Potomac Co., on the set of “Bubble Trouble.” PHOTO: THE POTOMAC CO.
The Potomac Co. hosted “Bubble Trouble: M&A in the Year of FED Tightening” in San Juan, Puerto Rico on May 4.
The Potomac Co.’s Paul Giannamore and Patrick Baldwin, who also co-host The Boardroom Buzz podcast, led a mergers and acquisitions discussion focused on the current bubble in the equity valuations and monetary tightening from the Federal Reserve and what it all means for the pest control industry.
Giannamore examined the market’s effect on fluctuating asset prices for business owners.
“Your wealth is the current price of that future cash flow,” he said in a news release. “We’ve lived in an era where policymakers have done everything in their power to create the wealth effect by juicing up the stock market, reflating the real estate market, and they’ve also tried pretty hard to create inflation. As we can see in 2022, they’re finally successful.”
During the event, Giannamore discussed the increase of prevailing interest rates in 2022 set by central banks with the Federal Reserve unable to support the market — a scenario last seen in the 1980s. Therefore, the bond and equity market is being repriced. Giannamore also mentioned that this will ultimately force The Fed to create “demand destruction” as a policy.
Using detailed charts, Giannamore presented private market multiples and public valuations and how they have changed over timed based on the macroeconomic environment and industry fundamentals.
With inflation running at its hottest in 40 years, pest control owners are now less optimistic, according to the news release. The “Big Four” (Anticimex, Terminix, Rentokil and Rollins), along with Thompson Street Capital Partners, Certus and others, are under a great deal of pressure when choosing which companies to acquire in 2022.
From left are David Billingsly, former president of the Western Region for Anticimex, and Jim McHale, former Potomac client and JP McHale president, on the set of “Bubble Trouble.” PHOTO: THE POTOMAC CO.
“I don’t care about the number of buyers in the market. I’m watching what’s going on in the debt markets. I’m watching what’s going on with high yield market and credit cycle…What Terminix is doing impacts things on the margin,” Giannamore said. “I always say to clients that it’s these big things that are going on. This is what matters.”
Jim McHale, former Potomac client and JP McHale president, and David Billingsly, former president of the Western Region for Anticimex were also part of “Bubble Trouble.” They discussed the ins and outs of the sales of both American Pest and JP McHale, markets and multiples, and answered dozens of questions from the live audience.
The full presentation of “Bubble Trouble: M&A in the Year of FED Tightening” can be found on YouTube.
The post The Potomac Co. hosted Bubble Trouble appeared first on Pest Management Professional.
from Pest Management Professional https://www.mypmp.net/2022/05/25/the-potomac-co-hosted-bubble-trouble/
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