Building a thriving business from scratch is just but the second most difficult task for some pool and spa business owners. The hardest task of all is successfully handing it over as you head for retirement. It’s a scary task, especially after sacrificing a lot and caring for it. It is without a doubt you’d like it to survive and continue growing.
There are many similarities between a family business and a child. A family business is like the birth of a child and its guidance to maturity. It is always a secret wish for every owner of a pool and spa business that one of their children will take over the business. This is to give the parent-owner a smooth, beneficial transition into retirement.
Most parent-owners have had this dream despite the various challenges like family conflicts, non-interested or even unable children.
Currently, a third-generation family-owned pool and spa business, Jet line Products, is one firm that has managed to undergo a successful transition. The results have been satisfying results for both generations. The retiring generation made away with good proceeds from their years of hard work. On the other hand, the new generation maintained important positions in a new era.
Warren Feder, an associate at Carl Marks Advisors, an investment bank that guides middle market companies, led the team on this successful sale. From his experience in facilitating sales of family owned businesses, he has valuable advice for family owners interested in a successful transition while maintaining family bonds and still enjoy the fruits of their efforts.
Family dimensions can complicate the operations of a family business. Based on statistics, most family business hardly makes it to the third generation and if they do they very few go beyond that. It is an uphill task to work through a family’s challenges and the challenges of a business both combined.
Many family business owners headed for retirement believe the best solution is to sell the business. The business should also operate separately from the family, even though this may not be their first instinct.
Jet Line is a pool equipment distributor established in 1971 by the Epstein family. By early last year, it was in its third generation of ownership.
There were different family groups with varying objectives. For the second generation, several siblings wanted to exit and cash out. On the other hand, for the third generation, three of them, Andy, Josh, and Brett Epstein, were seeking different opportunities the business could present. They wanted to grow the firm.
To reach an amicable solution, they held meetings and tried to keep the issue as confidential as possible. However, word leaked, and to their surprise, POOLCORP, their biggest competitor, reached out in response to the rumors.
After much persistence, POOLCORP eventually got to have a meeting with Jet Line. The meeting turned out to be a turning point for both companies. The meeting ended in a deal, and the company was finally closed at the end of September. The deal was satisfactory for both parties where Andy and Josh Epstein joined the new company holding senior positions, and the second generation siblings cashed out from the sale proceeds.
Helpful advice on a successful sale
From the successful Jet Line sale, Feder highlights some vital lessons to facilitate the sale of a pool and spa business, specifically a family business. The first point is to limit the players involved. One member is the most preferable. If you involve equal players with an equal say, it will make it difficult to get to a deal.
Secondly, get good advisors and allow them to do their work. Let’s face it; very few family business owners know how to sell their companies. You may need market experts and people who know how to structure deals.
The third element is the firm’s record keeping, and financial system as the buyer needs proof of its profits and revenue. Purchasers can send in their accountants to validate your figures. If you have good figures, it makes it easier to strike a deal; however, it makes the process a bit challenging if you have bad figures.
One of the biggest challenges in a pool and spa business sale is that expertise and experience lie with the management looking to cash out and leave the business. This makes it hard for the buyer to grow the business successfully. At this point, procedures, systems, organization, and having experienced people for management come in as an advantage. You need to know how the business will run after your exit unless you sell to an experienced buyer. In some cases, the owner can stay for a 2-3 year period to oversee a successful transition.
Covid Symptoms; Business Weariness
Covid has altered everything just like in every area of finance and economy, in business sales and acquisition. Feder reflects on 2020 events as increasing the pace of activity.
Many older people suffered from Covid, which may be a huge turning point in the pool and spa business industry. Even though a number of people escaped this harrowing experience alive, several people opt for their health and lives compared to business. As a result, according to Feder, it is an expectation that more families will be open to selling their businesses earlier and stay to facilitate a successful pool and spa business transition to avoid health risks when aged.
Claffey Pools Acquired by Riverbend Sandler Pools
The pool industry has seen a spate of recent acquisition announcements. The latest, being the recent acquisition of Claffey pools by Riverbend Sandler Pools. Backed by Chicago-based Concentric Equity Partners, they are continuing efforts to consolidate the swimming pool construction and maintenance industry in the Dallas-Fort Worth market.
The acquisition agreement was signed on December 31, 2021 but only made public on Thursday. Full details about the exact terms of the deal were not disclosed.
This marks the third major pool builder purchased by the holding company, after acquiring Pulliam Pools back in November. The acquisition of the Fort Worth-based firm made it one of the nation’s largest pool construction companies.
This recent acquisition of Claffey Pools which is ranked within the nations top pool construction companies with about $32 million in reported residential construction revenue in 2020. A builder of high-end inground swimming pools, Claffey’s average pool project costs around $142,000.
Riverbend Sandler intends to make considerable advancements by acquiring existing service and maintenance companies, in addition to focusing on construction. Consequently, they hope to become a key service provider in the state’s pool service and maintenance sector.
This in itself appears to be a key decision point for the Claffeys who are looking to expand their pool service and maintenance divisions. Last year’s Texas Pool freeze caused unprecedented amounts of damage across the Lone Star state and saw Claffey perform over 1,000 repairs as a result.
In regards to any restructuring of the organization, the Claffeys, along with their 95 employees, will remain with the company. Riverbend Sandler has announced its intentions to continue its expansion. It will continue to concentrate on Texas, for the time being, looking seriously to expand into the Austin, Houston, and San Antonio markets after having established the predominant marketshare in the Dallas area.
GENESIS Announces Newest Platinum Sponsor: Pool Magazine
(Alexandria, Va.) – GENESIS is pleased to announce its newest Platinum Sponsor, Pool Magazine. The GENESIS sponsorship program showcases companies that are dedicated to the highest standards of best practices, quality, and ethics in the pool and spa industry.
“We look forward to collaborating with PHTA and expanding our relationship as a Platinum Sponsor,” says Joe Trusty, CEO & Editor-in-Chief. “We are excited for this next chapter and look forward to making a positive impact on the industry.”
As a Platinum Sponsor, Pool Magazine will have the opportunity to maximize its brand visibility, connect with thousands of engaged industry professionals, and unlock valuable opportunities.
“We are delighted to add Pool Magazine to our distinguished list of Platinum Sponsors,” says Janay Rickwalder, Vice President of Communications and Public Relations of PHTA. “Pool Magazine has everything we look for in a partner: quality services that can benefit our members, an understanding of the importance of continuing education, and a finger on the pulse of industry trends. I am excited for this collaboration and to working together in 2022.”
For more information, please contact Janay Rickwalder, PHTA’s Vice President of Communications and Public Relations, at firstname.lastname@example.org or 703.357.3918.
About the Pool & Hot Tub Alliance
The Pool & Hot Tub Alliance (PHTA), a non-profit organization with nearly 3,500 members from around the world, was established in 1956 to support, promote, and protect the common interests of the $36.5B pool, hot tub and spa industry. PHTA provides education, advocacy, standards development, research, and market growth to increase our members’ professionalism, knowledge and profitability. Additionally, PHTA facilitates the expansion of swimming, water safety and related research and outreach activities aimed at introducing more people to swimming, making swimming environments safer and keeping pools open to serve communities. For more information, visit www.phta.org.
Pool Contractors Gift New Pool To Grandma After Disaster
A group of pool contractors are the answer to one homeowners prayers. For years, Kitty Smitth, an 80-year old resident of Indianapolis, had dreamed of having an inground swimming pool for her 29 grandchildren and great-grandchildren to enjoy. Smith had just recently used her life savings to purchase a home and property in South Indianapolis that she was hoping would allow her to finally realize those dreams.
Smith acknowledges that the home she purchased needed a lot of work inside, but held out hope of enjoying the backyard with her family. For Smith and her grandchildren, the backyard pool meant a safe haven from the dangers of the pandemic that was sweeping across the country last summer.
“They were here, swimming and playing. I can’t tell you how great that was. This has just been my dream my whole life,” she told reporters.
Future summer dreams would be put to an end this February when a winter storm caused her pool to collapse into a heap of disintegrating concrete and collapsed fiberglass walls. Smith was horrified to find that her backyard pool had collapsed in on itself in the night. “My whole body just started going numb and shaking. I couldn’t believe what I was seeing,” she told reporters.
An engineering report was conducted to determine the cause of the failure. Analysis determined that a leak may have contributed to its collapse. A new pool cover, which had just been installed, combined with the inadequate water level in the pool may have contributed to adding stress on the walls of the pool.
To add insult to injury, Smith quickly found out that her homeowners insurance would not cover the damage. Despite being a customer of the same company for over 40 years and having a policy that includes the replacement cost of an inground pool, her insurance company refused to pay a cent. They claimed her policy excluded any leak in the structure of the pool.
Smith was faced with an impossible problem. The cost of installing a new inground pool would be at least $60,000 plus an additional $20,000 for hauling away the debris from the old pool that had collapsed. “I just put everything into my house”, Smith told reporters, indicating that she didn’t have the financial resources to rebuild the pool. She stated that she felt like her insurance company had left her high and dry.
Smith contacted investigative reporters and discussed her problem with them. The reporters shared her story with some folks they knew in the pool industry that could help lend a hand. Ultimately, eight separate Indiana companies came together headed up under Automatic Pool Covers owner, Michael Shebek. Shebek pooled his resources and network to help put together a team that will help rebuild Smith’s backyard.
- Crone Customs Pools – Project Lead / Permits
- Only Alpha Pool Products – Donating Steel Walls
- Pools of Fun – Donating and installing the liner. Provide the water to fill the pool.
- Modish Pools – Donating concrete and labor to rebuild the decking
- Hendrick Pool and Lawn Service – Donating plumbing work for the pool
- C Ray Pools – Donating plumbing and electrical work.
- Automatic Pool Covers – Donating a new pool cover and providing other help.
- Cover Care – Donating installation of the pool cover
What is truly incredible about this story is that although some of the companies on this list are competitors, they are all united in the single goal to help one local resident recover the usage of her pool.
Shortly before the Thanksgiving holiday, Smith was greeted with the surprise of a lifetime. The contractors who have agreed to rebuild her pool at zero cost, showed up at her house along with the 13news team to break the good news. Overwhelmed with emotion, Smith hugged them all and said “I don’t know your names but I know your hearts,” telling the contractors, “I love you.”
Smith will hopefully have a new pool to enjoy with her grandchildren this summer. The contractors have all assured her that the unsightly mess in her backyard will be removed and a new pool installed. The entire cost of the project is estimated to cost approximately $90,000.
“Just no words. There aren’t words big enough to thank everyone,” Smith said. “I’m just so thankful.”
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