How This Operator Acquired a $1m Pool Maintenance Biz

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Today, we’re featuring an operator with an extensive background in M&A integration, finance, and operations who acquired a profitable pool maintenance company for $1m in the Southern US. 

He went from a passive strategic investor in the business initially to running it actively after his general manager quit shortly after the acquisition.

And he does all this while being employed by a software company and also running a yoga studio on the side…

We’ll break down exactly how he did it, including how he structured the deal, financed it, which bank he chose to work with, and more.

Note: He prefers to remain anonymous, so for purposes of this post we’ll call him "Ben". If anyone wants to connect with him to learn more, let us know!

His Story

While in college, Ben owned and operated a painting business with 25 employees, giving him exposure to a service business early on.

Over the next 15-20 years, Ben worked in a series of roles across operations, finance, and M&A integration at several mid-sized and large companies, gaining a lot of relevant experience for buying and running a business.

He said, "my ops heavy background definitely prepared me really well for running a pool maintenance company”.

In early 2017, an ex-colleague brought him an acquisition opportunity for a pool maintenance company. They teamed up with another colleague who was meant to be the day-to-day operator in the business, while Ben and the 3rd partner were to remain more passive.

But that’s not how it all played out…

A couple of months into the acquisition, the operating partner decided this wasn’t for him and left the business. A month later, the region in which they operated was hit by a hurricane, leaving many of the pools full of debris and unusable for a period of time.

Ben had to step in operationally (while living out of state), figure out how to retain customers and gut the team, which was underperforming.

He said, “it certainly hasn’t been pretty”, but through a lot of hustle and hard work, Ben has managed to stabilize the business and put it on a path for stronger growth in the future.

Acquisition Process

• Ben wasn’t actively looking for deals. He said, “this deal just fell in my lap from a guy I worked with before who came across it from a broker he knew.”

• Here’s why they liked the business:

  • Recurring revenue (clients paid monthly for service)

  • Strong customer retention

  • 65% of the customer base was commercial and less price sensitive

  • Profitability (50%+ gross margin / 20%+ net margin)

  • Purchase price included $250k of real estate, making it eligible for longer term financing — this helped them secure a longer amortization period (15 years vs 10 years for most) on the loan

• The goal was to fund most of it with a SBA loan so they approached a few local banks quickly but ultimately went with Wells Fargo who offered better terms

• “The process with the seller was quite smooth as he was looking to retire and we felt the asking price was reasonable.”

• They were able to put the deal under LOI quickly (1-2 weeks) and the whole process took about 4 months, primarily due to the SBA loan

• The 3 partners relied on their operations and finance experience to conduct diligence themselves

The Business

• Industry: Pool Maintenance

• Description: Business provides monthly pool cleaning service and repairs to residential and commercial customers

• Established: 1982

• Employees/Contractors: 11

  • 1 commercial manager / 8 service techs / 2 repair techs

• Acquired Revenue (2021): $1.2m 

  • 70% recurring service / 30% repairs

  • 65% commercial customers / 35% residential

• Acquired EBITDA (2021): $250k

Deal Structure

Ben initially split up the equity downpayment of $200k with two other partners and owned 1/3 of the business at the outset. When the operating partner left, the two remaining partners ended up owning 50% each.

They approached a few local banks but ultimately decided to work with Wells Fargo for the SBA loan because it gave them the best terms.

How’s It Going

• 2023 revenue was $1.6m so the business has grown ~5% per year since acquisition in 2017

  • This is slower than Ben had hoped but he had to deal with his operating partner leaving, the hurricane and rebuilding a lot of the team

• Has tech-enabled a few aspects of the business (route management / scheduling, service tracking) and sees a huge opportunity to fully tech enable lead gen to conversion

• Hiring and retaining solid technicians is the #1 challenge

• From a customer acquisition standpoint, the business today relies mainly on word-of-mouth and referrals but Ben plans to implement digital marketing strategies such as Google Ads and email campaigns

• Ben is also considering add-on acquisitions

Exit Goals

Ben believes he can grow the business to $6m in revenue over the next 5-10 years before selling. That being said, he would be open to selling sooner if the opportunity presents itself, but he’s not in any rush.

From an exit standpoint, the business is well positioned as there is growing private equity interest in the pool maintenance industry.

Several PE-funded roll-up platforms have emerged over the last few years, targeting companies with $3-5m+ in revenue. National Pool Partners is one of the more recent ones, for example.

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