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The US dollar has dropped ~9% against a basket of world currencies over the past year, falling to its weakest level since March 2022 according to Bloomberg. For home and commercial services operators who source copper, aluminum and steel, that move is not a footnote. It is a cost input compounding on top of tariffs already running through the supply chain, and most operators have not fully priced for both at once.

The currency channel is straightforward. A weaker dollar raises the cost of imported goods regardless of what tariffs are doing. In 2026, both are moving in the same direction. Aluminum is up 12.2%, steel up 6.9% and copper up 5.8% year to date. According to an August 2026 analysis by Associated Builders and Contractors, US construction input prices are ~8.9% higher than in August 2025. The dollar’s decline is not the only driver but it is amplifying every other cost pressure already in the system.

Copper is where the exposure is sharpest. The US imports roughly half its annual copper supply and operates just two domestic smelters, leaving contractors almost entirely as price-takers on one of their most critical inputs. Section 232 tariffs of 50% on many semi-finished copper products have been in effect since August 2025, and a drop in copper futures does not mean wire, equipment or copper-intensive products will see an equivalent decline at the contractor level, as ACHR News noted in September. With ~40% of construction materials imported, HVAC firms and contractors must treat supply chain exposure as a planning variable, not a line item to revisit at bid time.

The downstream exposure runs across the trades. HVAC systems rely on steel cabinets, aluminum fins, copper tubing and imported electronic parts. Plumbing depends on copper fittings and imported fixtures. Electrical projects are exposed through steel conduit, panels, breakers and wiring. An operator whose bids do not account for ongoing currency-driven cost inflation is building margin compression into every job they quote.

For investors underwriting trades platforms, the dollar’s trajectory is now a margin input worth tracking alongside commodity prices and tariff schedules. The operators managing this well are pre-positioning materials, building flexibility into bids and communicating cost changes to customers before the invoice arrives. The ones who are not are absorbing it.

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A pipe bursts, a basement floods, a storm takes a roof and within hours the homeowner’s insurance carrier has already told them who to call. That referral relationship is becoming the variable that determines which restoration operators get bought and at what multiple. Restoration has become one of the most active roll-up verticals in residential and commercial services, and the operators winning are not necessarily the ones doing the best work. They are the ones getting called first.

1. Relationships are structural, not seasonal. Unlike a maintenance contract, a carrier referral relationship does not get re-bid every year. Water damage restoration accounts for roughly half of IBISWorld’s projected damage restoration industry revenue of $7.2 billion, and that work comes almost entirely through insurance claims. When a restoration company holds approved vendor status with an insurance carrier, that status is what buyers are actually paying for. Two operators with identical revenue lines can sit at opposite ends of the valuation range depending on whether their work comes through a carrier program or retail calls. CT Acquisitions’ 2026 Restoration Roll-Up Tracker cites valuations running between 3.24x and 4.31x trailing EBITDA within the industry. The revenue looks the same on an income statement. It is not the same business to a buyer.

2. Consolidation confirms the thesis. The PE Stakeholder Project counted 72 private equity acquisitions of disaster restoration companies between January 2020 and June 2023, plus at least 49 additional acquisitions since September 2023. These sponsors are building the only kind of scale that gets a platform onto a national carrier’s speed dial list. Five identifiable national platforms are actively rolling up regional restoration operators as of Q2 2026 per CT Acquisitions’ 2026 Sell-Side Guide, and the pace is not slowing. The platform that captures national carrier relationships first creates a structural barrier the next buyer has to price through.

3. Working capital requires scrutiny. Restoration businesses carry a working capital profile unlike most service verticals. CT Acquisitions notes insurance claim collection cycles run 60 to 180 days, meaning the business is often floating significant receivables at any given moment. That lag is not a red flag but it is a diligence item that requires more attention than a business paid in 30 days. A working capital target set without accounting for the claim cycle will create a cash shortfall the buyer absorbs post-close.

For sponsors underwriting restoration platforms, the question is not how much revenue a target brings in. It is where that revenue comes from and how defensible the carrier relationship is. A target with strong carrier program status has a structural position. A target without one has a phone number that stops ringing the day a bigger platform undercuts them on the next bid. In restoration, the referral relationship is the asset. Everything else is execution.

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Rentokil did not become the world’s largest pest control company by being the most innovative. It became the largest by being the most disciplined about one thing: density. Every acquisition the company made over the past two decades followed the same logic. Buy the leading operator in a market, keep the brand where it has equity, integrate the back office and move to the next city. Repeat it enough times and what looks like a roll-up becomes infrastructure.

The company’s origins are British. Founded in 1925, Rentokil spent decades as a European pest control and facilities services operator before making its move into North America. The US market was the prize because it was the largest and most fragmented pest control market in the world, with thousands of regional and local operators and no single dominant national player outside Rollins. Rather than competing head-on with Rollins from the start, Rentokil built density in markets Rollins had not yet consolidated and used scale to force the conversation.

The Terminix acquisition changed the calculus entirely. In 2022, Rentokil acquired Terminix for ~$6.7 billion, instantly making it the largest pest control company in North America and effectively the largest in the world by revenue. Terminix brought ~$2 billion in annual revenue, a national branch network and one of the most recognized brand names in residential pest control. The combined entity gave Rentokil the route density, brand recognition and technician workforce that would have taken another decade to build organically.

The integration did not go smoothly, and Rentokil has been transparent about that. Branch consolidation, system migrations and technician retention problems weighed on margins in 2023 and 2024. The company flagged North America as an underperforming region for multiple consecutive quarters, cut guidance and watched its share price suffer. Presenting 2024 results in March 2025, then-CEO Andy Ransom called it "a challenging year for the Group, with lower profits and margins" and conceded that executing the Terminix integration "has clearly impacted our North American business performance." The lesson from that period is one every roll-up operator should internalize: acquiring density and operating density are two different things. Rentokil bought the routes. Making them run efficiently was a separate and harder problem.

What makes Rentokil worth studying for LMM operators and investors is not just the scale of what they built but the model underneath it. Pest control has the recurring revenue profile that makes roll-ups compelling: annual contracts, high renewal rates and low customer acquisition costs once a route is established. Rentokil’s density strategy maximized technician utilization by packing routes tightly enough that a single technician could complete more stops per day in a consolidated market than a standalone operator could in a fragmented one. That efficiency gain is what justifies the acquisition premium and what drives margin expansion over time once integration settles.

The North American turnaround is now underway. Rentokil has simplified its branch structure, invested in technician retention and is showing early signs of margin recovery. For the LMM, the Rentokil story is a reminder that the pest control consolidation thesis is real, proven and still playing out. The question for smaller operators is not whether the market consolidates further. It is whether they get acquired on their terms or absorbed at a discount when a national player eventually fills the gaps in their geography.

WestGate Partners (WGP) is an independent sponsor focused on acquiring and growing lower middle market businesses in residential and commercial services. We bring institutional experience, tailored capital with hands-on partnership to help owners transition, grow and preserve their legacy. By partnering with strong operators, we build enduring businesses in economically-insulated industries.