Rentokil: The ‘unglamorous’ business that became a global powerhouse

“This industry is unglamorous,” admits Andy Ransom, “but it gets in your blood.” The industry in question is pest control. Ransom has just stepped down as CEO of Rentokil Initial after just over 12 years in the top job.

Its technicians are experts in tackling infestations by rats, mice and termites – but also lots of other exotic animals in far-flung parts of the globe, from camels in the Middle East to snakes in India.

When he joined Rentokil, Ransom explains to Sir Richard Harpin on the Business Leader Podcast, it was involved in many business areas, from parcel delivery to industrial laundry.

One of his first decisive actions was to focus the business on the most profitable part, pest control, by selling off the rest.

It’s an essential industry that reliably grows year on year, he explains. Pest infestation is also something that always needs to be addressed as a matter of urgency, regardless of your financial situation. So it is fairly immune to financial shocks, like recessions or cost-of-living crises. Hence, the saying in the business, “rats don’t read the FT”.

In fact, climate change is making the service even more in demand, because it has been speeding up the breeding cycles of many pests, says Ransom. The strategy has paid off, as Rentokil’s share price has quadrupled during his leadership and profits breached $1bn, as he focused the business and pushed its global expansion.

His big secret to scaling has been mergers and acquisitions (M&A). “I’m a deal junky,” admits Ransom, “I always loved transactions, loved the negotiations.”

He started his career as a lawyer at chemicals giant ICI and ended up specialising in mergers.

He has used a relentless strategy of M&A to gradually not only grow Rentokil’s business around the globe, but also improve its operational efficiency. He’s averaged around 40-50 acquisitions per year.

Better “density” of service, Ransom explains, improves profit margins. You don’t want your technicians wasting time sitting in their vans.

Many of these acquisitions have been of small “mom and pop” family businesses, which his team have carefully integrated into the Rentokil empire. Half of the global pest control market is in North America and Ransom explains the challenges of scaling in this key territory, most notably with the largest acquisition of his tenure, Terminix.

Rentokil is now in 88 countries, but two-thirds of its business is done in the US.