Custom Pool Building & Remodeling Company, 17-Year Phoenix Contractor

$4.2M

Revenue

$550K

SDE

5.3x

Multiple

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

This is a long-established custom pool builder based in Phoenix, Arizona, operating since 2007. Beyond new pool construction, the business runs three complementary revenue lines: remodels, service, and repairs. It carries a perfect ROC (Arizona Registrar of Contractors) rating and a clean BBB record, which in the licensed-contractor world signals a low dispute history and consistent workmanship, both of which matter for referral flow and permit relationships.

The business generates roughly $4.19M in revenue against $550K in cash flow, a lean roughly 13 percent owner-earnings margin that is typical for construction with material and labor pass-through. It runs on just 4 full-time employees out of a leased 2,400 square foot facility, meaning much of the labor is likely subcontracted, a common and capital-light model for pool builders. Inventory of $115K is not included in the asking price.

Phoenix is one of the strongest pool markets in the country given the climate and the large installed base of aging pools that need remodeling and re-plastering. The seller is exiting for a new venture, not retirement or distress, and is offering only 2 weeks of transition support, which is thin for a relationship-driven contracting business. At 5.35x cash flow, this is priced aggressively for a project-based construction business with cyclical new-build exposure.

Why we like it

The service and repair lines layered onto new construction give this business a base of demand that is less cyclical than pure new-pool building. Re-plastering, equipment replacement, and repairs recur across the enormous installed base of Phoenix pools regardless of whether homeowners are financing new builds. That mix is what separates a survivable pool company from a boom-bust new-construction shop.
A perfect ROC rating and clean BBB record are not marketing fluff in the contractor world, they reflect a genuinely low dispute and lien history. That reputation drives referral flow and protects the license, which is the single most valuable asset when acquiring a contracting business. A buyer inherits credibility that would take years to rebuild from scratch.
Phoenix has structural tailwinds for this category: relentless population growth, a climate where pools are near-essential, and hundreds of thousands of aging pools entering remodel and resurface cycles. The remodel and service tail alone can carry the business through soft new-build periods. This is one of the better geographies in the country to own a pool operation.
The business runs lean on just 4 full-time employees in a small leased facility, implying a subcontractor-heavy model with low fixed overhead. That structure flexes with demand and protects margins when volume dips. For an operator who can drive lead generation, the incremental economics on added jobs are attractive.

How to improve it

Build out and productize a paid service and maintenance membership so recurring cash flow offsets the lumpy new-build revenue. Pool equipment (pumps, heaters, filters) fails on predictable cycles, and a subscription maintenance base would smooth revenue and raise the exit multiple materially. This is the single highest-leverage change available.
Install a real lead-generation engine: Google Local Services ads, a modern website with financing options, and a referral program tied to the strong BBB and ROC reputation. Most legacy pool builders under-invest in digital acquisition and rely on word of mouth. Systematizing lead flow in a growth market like Phoenix can lift revenue without adding fixed cost.
Push aggressively into higher-margin remodels and resurfacing given the massive aging pool inventory in Maricopa County. New builds carry material and permitting risk, while remodels have shorter cycles and better cash conversion. Reweighting the job mix toward remodel and repair improves both margin and predictability.
Formalize the subcontractor bench and job-costing systems to protect margin as volume grows. With only 4 employees, the business likely depends heavily on trade partners, and any margin leakage on labor or materials compounds fast in construction. Tight estimating and change-order discipline directly convert to bottom-line dollars.
Negotiate the 2 weeks of training up to a longer paid consulting arrangement, or make an extended handover a condition of close. In a relationship and reputation-driven contracting business, two weeks is dangerously short to transfer vendor terms, permit relationships, and referral sources. Retaining the seller through at least one busy season de-risks the transition.
Add adjacent high-ticket services such as pool decking, outdoor kitchens, and automation upgrades to raise average job value. These attach naturally to remodels and let you capture more wallet per customer without new acquisition cost. Bundling elevates ticket size and differentiates from single-service competitors.

Diligence notes

Break down the $4.19M revenue by line: new construction versus remodel versus service and repair. New-build heavy revenue deserves a lower multiple because it is more cyclical and interest-rate sensitive, while a strong service and remodel base justifies the ask. The mix fundamentally changes what this business is worth.
Scrutinize the 5.35x cash flow multiple against comps, which is rich for a project-based construction business, and verify the $550K cash flow with tax returns and add-back detail. Confirm the earnings are normalized and not inflated by owner add-backs or a strong single-year construction cycle. Also confirm inventory of $115K is truly excluded from the price.
Investigate owner dependence: with only 4 employees and a small facility, determine how much of sales, estimating, and customer relationships run through the departing owner. The 2-week training window and stated reason of a new venture raise the risk that the rainmaker walks out the door. Identify who holds the ROC license and whether it transfers cleanly.
Review the backlog, work-in-progress, and any warranty or lien exposure on prior jobs. Pool builds carry callback and warranty liability that can follow the buyer, and the perfect ROC record should be validated against actual complaint and permit history. Confirm the lease terms on the 2,400 square foot facility and whether it transfers.
Assess concentration and seasonality in the customer and lead sources. Understand how much revenue comes from a few builders or referral partners versus a diversified base, and map cash flow across the Phoenix build season. Lumpy deposit-driven cash flow needs a working-capital plan post-close.

Source

Originally listed on BizBuySell. View original listing →