with Keith Zars Pools · Pool Construction and Service Company with 40 Years in Business
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
The listing benefits from a strong San Antonio market, owned real estate, an established brand, and a long operating history, but the panel viewed the business as a difficult operator fit because construction revenue is cyclical and labor-intensive.
Pool construction is a fundamentally different acquisition than pool service because construction depends on large projects while service depends on recurring maintenance contracts.
A low EBITDA multiple can still be unattractive if the business is operationally hard to run, labor constrained, and cyclical.
Owned real estate can make a deal look better than it is if the operating company is paying below-market rent to the seller.
In contractor businesses, the ability to price jobs correctly is often a bigger risk than headline revenue growth.
Long operating history and a smooth transition do not eliminate the difficulty of taking over estimating, costing, and labor management.
If a market supports only a couple of large pool builders, a subscale buyer may be fighting structural economics rather than just a weak seller.
A business that is turning away jobs because of labor shortages may still have growth limits if the labor model cannot be expanded profitably.
A seller offering financing on the real estate can be a clue that the property value is being bundled into the story rather than the operating cash flow.
The panel contrasts project-based construction with recurring maintenance work to judge volatility, transferability, and financing risk. Businesses with repeat contracts are preferred over businesses dependent on one-off jobs.
When to use: Use this when comparing contractor businesses to service businesses in ETA underwriting.
In equipment-heavy local trades, the largest players often capture the best leads and operate more efficiently because scale matters in marketing and utilization. Smaller competitors can get squeezed even in healthy markets.
When to use: Use this when evaluating fragmented home-services markets with high fixed equipment needs.
The listing asked $3.2 million for a business showing $756,000 of 2022 EBITDA, which is about a 4.0x multiple.
The hosts reverse-engineered the multiple from the stated asking price and historical EBITDA.
The teaser also referenced $4.2 million of gross sales in 2022 and $756,000 of EBITDA.
Bill and Michael compared the 2022 actuals with the higher forecast-like figures in the listing.
The listing referenced $4.6 million of gross revenue and roughly $920,000 of EBITDA, suggesting a forward-looking number set.
The hosts suspected those figures were an estimate rather than actual trailing results.
The building is 10,000 square feet and the business employs 26 people.
Michael read the listing details about the owned facility and staffing.
The company said it had been established in 1983.
The panel used the long history to question how consistently the business had actually produced profits.
The seller was offering owner financing on the real estate and planned to stay for 12 to 24 months.
The listing framed transition support and property financing as part of the deal story.
The hosts cited San Antonio pool builders doing roughly $15 million to $18 million in annual revenue as examples of larger operators in the market.
They used that figure to argue this listing might be subscale relative to the market leaders.
Ask for a full multi-year revenue and margin history before valuing a project-based contractor.
Why: You need to see whether profits are stable across cycles or simply the product of a hot market.
Underwrite the rent or real estate arrangement at market terms, not seller-favorable terms.
Why: Below-market occupancy costs can inflate EBITDA and mask the true earning power of the operating business.
Stress-test job costing and estimating before closing.
Why: In contracting, a buyer can lose money even when revenue is strong if bids are mispriced.
Prefer recurring maintenance businesses over pure construction when you want lower volatility.
Why: Recurring revenue is easier to forecast, finance, and manage than one-off project work.
Treat a seller’s offer to finance real estate as a cue to inspect the property economics closely.
Why: The property may be supporting the headline valuation more than the operating company is.
Michael described how two brothers in the local pool business split up and each formed a separate company, creating multiple recognizable brands from the same origin story. He used that history to illustrate how much local trade businesses are shaped by family dynamics and founder drama.
Lesson: Local service businesses often have hidden lineage that explains competition, branding, and market structure.
Heather recalled a deal in which the seller kept the real estate but raised the rent to market, and the buyer no longer had any apparent EBITDA lift from occupancy savings. The example showed how seller-owned real estate can distort underwriting if the rent is artificially low.
Lesson: Always normalize rent before deciding what a business is really worth.