Picture two pool companies in Montgomery County. Each one grosses $620,000 a year. Each one runs a couple of trucks out of a rented shop; one in Montgomeryville the other in Conshohocken.
One will sell for roughly 2.5 times its earnings. The other will have a hard time getting a buyer to finish diligence.
Same revenue. Same county. Same pools, more or less. The difference is what that revenue is made of.
Two $620,000 companies
Say the first company is a route business. Of its $620,000, about $430,000 comes from weekly service accounts: chemicals, brushing, basket cleaning, filter checks, billed monthly on autopilot. Most of those customers have been on the route for three-plus years. The remaining $190,000 is openings, closings and repairs, which come along with the routes.
Say the second company flips that mix. Only $170,000 is weekly service. The other $450,000 is one-time work: openings, closings, liner replacements, pump and heater swaps, the occasional equipment package. The owner is great at it. He’s also the guy who gets the call every time somebody’s pump dies in July.
Run both at a 28% owner-benefit margin and you get roughly $174,000 in seller’s discretionary earnings (SDE: what one working owner takes home after you add back the owner’s pay and personal expenses). On paper, they’re twins.
They aren’t. Buyers price the first one on a multiple of what the route will keep producing next year. They price the second one on what the owner can keep winning, which is a very different bet.
Why the mix moves the multiple
A buyer looking at a pool route is really buying a calendar. Forty-odd weekly stops a day, five days a week, each one a small recurring bill. If the customer base holds, next summer looks like this summer. A lender can underwrite that. A buyer can finance it. A route-heavy company can reasonably command something around 2.5x to 3x SDE, and the number shifts with account tenure and how clean the billing is.
Project work is a different animal. It comes in waves, it depends on the owner’s reputation and phone, and it has to be re-earned every season. Buyers usually pay somewhere in the low-to-mid 2x range for that kind of income, and sometimes less if it all runs through one person. On $174,000 in SDE, a gap of even half a turn is about $87,000.
Nobody is going to call project revenue worthless. A buyer simply won’t assume it repeats.
This is also where owners get tripped up. They look at the $450,000 of project revenue and see a thriving business. The buyer’s accountant sees a trailing-twelve-month figure with no guarantee behind it.
Why Montgomery County is a decent place to own a route
Pool service is a recurring-revenue business sitting on a pool base with a lot of tailwind. Industry estimates put the number of installed pools in the U.S. at roughly 10.7 million, and that same trade coverage calls service and maintenance the strongest recurring revenue category in the pool business.
Montgomery County fits the profile. According to Census QuickFacts, the county has about 335,500 households, a 71.4% owner-occupancy rate, a median owner-occupied home value of $436,700, and a median household income of $113,915. Those are homeowners with equity and the income to hire out a weekly chore. Lower Merion, Upper Dublin, Lansdale and the Main Line corridor are where the density sits.
The same data has a flip side. About 21.2% of county residents are 65 or older. Some of those households will downsize and sell the house, pool included. A route made up of long-tenured retirees can quietly lose several accounts a year to moves and pool closures. A buyer will ask for the cancellation history by account, and “I think we lost a few” is not an answer.
Then there’s the season. Pennsylvania pools mostly run May through September, so a trailing-twelve-month look can flatter or punish a business depending on when you list. List in March and the buyer is underwriting a season that hasn’t happened yet. List in September and the numbers are as good as they’ll get. Timing matters here more than in most trades.
What to do before you list
Build the route list first. Every weekly account, its monthly rate, start date, and whether it’s on automatic payment. A clean one-page route schedule will do more for your price than any marketing language.
Second, separate your revenue. Show service income and project income as two lines in the books, not one blended number. If a buyer has to guess which is which, they’ll guess low.
Third, get the owner off the route. If you personally service 15 of the 40 weekly stops and know every customer by their dog’s name, a buyer is pricing a transition problem. Hand a few routes to a technician at least a season before you sell, and let the customers get used to it.
Finally, check your supplier and equipment setup. Chemical accounts, vehicle titles and any in-house financing for customers all have to transfer cleanly, and a buyer using SBA financing, which caps 7(a) loans at $5 million, will want to see all of it documented. Businesses this size usually fall well under that cap, but the lender’s documentation checklist is the same either way.
The takeaway
If you own a pool service company in Montgomery County, the question to ask isn’t how much revenue you did. It’s how much of that revenue shows up next Tuesday without you.
The more of it that does, the more a buyer will pay. The less of it that does, the more they’ll discount it, or walk.
Curious what your business is worth? Talk to us before you list, and we’ll show you how a buyer will read your route and project mix, and what to tighten up while there’s still time to do it.