Over the last three years, the formerly sleepy mom and pop pool service industry has been shaken up by big investment firms seeking to consolidate the market into a modern, optimized—even more profitable—business venture.
“It’s definitely the buzz going around right now,” said Alexa Blanda, PHTA’s Service Council chair and service manager of Mill Bergen Pools. “Everyone is kind of looking for that out. ‘Who’s going to take my company and take it to the next level?’”
The answer to that question used to be the next generation. But now there’s another option: selling to consolidators. There are three main consolidators: Pool Troopers, SPS PoolCare and National Pool Partners. All are especially focused on the Sun Belt region.
Why are these outside investors suddenly interested? Consider these numbers. The U.S. market:
- Will be $7.9 billion in 2023.
- Is expected to grow 1.9% this year.
- Has grown 3% since 2018.
The approximately 80,000 businesses that make up the pool service industry also possess four key elements consolidators look for, according to Fraser Ramseyer, CEO and founder of SPS PoolCare. Those are:
- High fragmentation, meaning most businesses are small with little consistency or major players.
- Recurring revenue with a potential for high cash flow.
- An essential service that is recession-proof.
- Low technological adoption, making it ripe for optimization using sophisticated tech solutions.
Although headlines about consolidation are now common, there is no good data on the number that have occurred in the last three years. Ramseyer said his firm has done about 50 in the last two years. He expects the other players to have notched up similar sales.
He said the business boost the pandemic gave to the pool and spa industry helped make service firms more attractive to investors. But, he added, the industry is still in the early stages of consolidation and should expect more. “The majority of the companies are so small that it creates a challenging environment to scale,” he said.
Not everyone is happy about the trend, however. “You have to feel scared if you’re a small guy because you spent your whole lifetime building a business and all of a sudden competition is getting stronger,” said Bob Blanda, owner of Mill Bergen Pools, which has been in business since 1986.
Ramseyer said that kind of fear is one of the biggest misconceptions about consolidation. Instead, he argued it will create a “rising tide lifts all boats” environment.
“I’m doing this to make the industry a better place so everyone in the ecosystem can win,” he said.
For example, Ramseyer said that when SPS PoolCare buys a firm it invests in that business with a new fleet of vehicles and sophisticated scheduling technology that optimizes routes and improves customer service. Those improvements mean employers can earn more money and channel those profits into higher pay for employees.
As the businesses become savvier, they can demand more from vendors, manufacturers and other partners—and attract new workers to the industry.
And for service owners looking for an exit strategy, consolidation offers a potentially highly profitable route. “Older families are just looking for the right way to transition to the next chapter of their lives,” Alexa Blanda said.
She added: “With the climate we’re in, a lot of these smaller companies are inevitably going to be bought out or just wither away. I don’t look at it as a bad thing. If you’re smart about it and get the timing right, you could be on the lucrative end of it.”
But Ramseyer said not every pool service business is attractive to investors. He offered the following advice for those who want to sell:
- Aim to minimize employee attrition.
- Drive strong Google reviews.
- Set up business with a branch manager rather than an owner/operator.
- Ensure service pricing is appropriate for the market.
- Maintain a clean, well-run facility with a positive working environment.
As consolidation continues and more dollars are invested, Ramseyer said the benefits will start to become more apparent to everyone.
“It’s not something to be afraid of; it’s something to be excited about,” he said. “It’ll help elevate the industry and it will bring a lot of benefits to everyone who operates in the pool service industry. Even if someone doesn’t want to sell, it benefits them.”