Quarterly report [Sections 13 or 15(d)]

ACQUISITIONS

v3.25.3
ACQUISITIONS
 9 Months Ended
Sep. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
ACQUISITIONS ACQUISITIONS
Saela Pest Control Acquisition
On April 1, 2025, the Company acquired 100% of Saela Holdings, LLC ("Saela") for $207.2 million. The Company funded this acquisition using cash on hand and borrowings under the commercial paper program.
The acquisition will expand the Rollins family of brands, and management believes the acquisition will drive long-term value given Saela's attractive financial profile and complementary end market exposure.
The Saela acquisition has been accounted for as a business combination, and Saela's results of operations are included in the Company's operations from the acquisition date. During the three and nine months ended September 30, 2025, Saela contributed revenues of $19.6 million and $38.5 million, respectively, and net earnings of $2.2 million and $5.0 million, respectively.
The valuation of the Saela acquisition was performed by a third-party valuation specialist under management’s supervision. The estimated purchase price allocation disclosed as of June 30, 2025 was revised during the measurement period as new information was received and analyzed resulting in an increase in customer contracts, a decrease in goodwill, and other immaterial changes, as presented in the table below. The initial and updated preliminary values of identified assets acquired and liabilities assumed for Saela are summarized as follows:
(in thousands)
 Initial Preliminary Allocation as of 4/1/2025 Measurement Period Adjustments Updated Preliminary Allocation as of 4/1/2025
Cash $ 1,506  $ 16  $ 1,522 
Accounts receivable 832  (27) 805 
Materials and supplies 573  —  573 
Other current assets 414  —  414 
Equipment and property 4,648  12  4,660 
Goodwill 132,959  (3,863) 129,096 
Customer contracts 52,200  4,100  56,300 
Trademarks & tradenames 17,300  —  17,300 
Operating lease right-of-use assets 991  —  991 
Accounts payable (1,961) (23) (1,984)
Accrued compensation and related liabilities (949) (115) (1,064)
Other current liabilities (389) (6) (395)
Operating lease liabilities (991) —  (991)
Assets acquired and liabilities assumed $ 207,133  $ 94  $ 207,227 
Included in the total consideration above are cash payments of $193.7 million made upon closing, contingent consideration valued at $8.8 million that is based on Saela's expected financial performance in the two years following the acquisition, and holdback liabilities valued at $4.7 million to be held by the Company to settle indemnity claims and purchase price adjustments. The fair value of the contingent consideration was estimated using a Monte Carlo simulation. During the three and nine months ended September 30, 2025, we recognized a charge of $1.1 million and $2.2 million, respectively, related
to adjustments to the fair value of contingent consideration resulting from the acquisition of Saela. This charge is reported in sales, general and administrative expenses on our condensed consolidated statement of income.
The acquired Saela customer contracts are estimated to have a remaining useful life of 7 years. The acquired trademarks and tradenames are expected to have an indefinite useful life. See Note 6, Goodwill and Intangible Assets, for further details.
Goodwill from this acquisition represents the excess of the purchase price over the fair value of net assets of the business acquired. The factors contributing to the amount of goodwill are based on strategic and synergistic benefits that are expected to be realized. The recognized goodwill is expected to be deductible for tax purposes. Valuations of certain assets and liabilities, including intangible assets and goodwill, as of the acquisition date have not been finalized at this time and are provisional.
Pro Forma Financial Information
The following table presents unaudited consolidated pro forma information as if the acquisition of Saela had occurred on January 1, 2024. This information presented below is for illustrative purposes only and is not necessarily indicative of results that would have been achieved if the acquisition had actually occurred as of the beginning of such years or results which may be achieved in the future.
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2025 2024 2025 2024
Revenues $ 1,026,106  $ 935,459  $ 2,863,418  $ 2,602,961 
Net income 162,666  138,576  408,052  362,896 
This information adjusts for the effects of material business combination items, including the alignment of accounting policies, the effect of fair value adjustments including the amortization of acquired intangible assets, and income tax effects.
Other 2025 Acquisitions
The Company made 19 other acquisitions during the nine months ended September 30, 2025. The aggregate preliminary values of major classes of assets acquired and liabilities assumed recorded at the dates of acquisition are summarized as follows:
(in thousands)
 September 30, 2025
Cash $ 633 
Accounts receivable 2,074 
Materials and supplies 912 
Other current assets 256 
Equipment and property 6,071 
Goodwill 60,332 
Customer contracts 42,607 
Trademarks & tradenames 1,667 
Other intangible assets 1,838 
Current liabilities (859)
Unearned revenue (2,726)
Other assets and liabilities, net (6,189)
Assets acquired and liabilities assumed $ 106,616 
Included in the total consideration of $106.6 million are acquisition holdback liabilities of $12.7 million.
The Company also made payments of $2.8 million for prior year acquisitions during the nine months ended September 30, 2025.
Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. The factors contributing to the amount of goodwill are based on strategic and synergistic benefits that are expected to be realized. A majority of the recognized goodwill is expected to be deductible for tax purposes. Valuations of certain assets and liabilities, including intangible assets and goodwill, as of the acquisition date have not been finalized at this time and are provisional.