Another company has added to the roll-up trend occurring in the pool/spa business. This one — brand new to this industry — enters the distribution space.
Springing from a parent company with roots in the building and landscape industries, Heritage Pool Supply Group debuted by making its first acquisition, stating the intention to grow nationally.
Last month, the firm purchased Naperville, Ill.-based Aqua-Gon. Principals of the 56-year-old company — Phil Horvath and Mike Brock — will continue to run operations for its four locations in Illinois, Missouri, Wisconsin and Minnesota.
“Aqua-Gon has an outstanding reputation as a trusted partner to customers and suppliers, and we look forward to building on the company’s track record of success in the many years to come,” said Matt McDermott, president of Heritage Pool Supply.
Said Phil Horvath, president and owner of Aqua-Gon: “I am confident in Heritage’s ability to provide Aqua-Gon with the additional resources needed to fuel growth but, more importantly, programs that will provide both professional and financial opportunities for all Aqua-Gon associates. I firmly believe that this new partnership will be the catalyst to building a very special legacy in our industry.”
This marks the second company in 2021 to initiate roll-ups as a means of gaining national coverage in pool/spa distribution, which has been largely dominated by one company for two decades. Earlier this year, Florida Water Products voiced national aspirations when it acquired Corona, Calif.-based Pool and Electrical Products.
Heritage Pool Supply Group is modeled after the landscape-supply operation owned by its parent company. Since its founding in October, 2018, Heritage Landscape Supply Group has grown to 135 locations across 25 states. It achieved most of this expansion by acquiring established distributors that had between one and 19 locations. About 15 to 20 branches were organic outgrowths of acquired locations.
According to Heritage, its business model is designed to build “a family of independents rather than a national platform.” This mean acquired distributors largely remain the same. The original owners stay on indefinitely to manage operations so they run mostly as they have before, except with Heritage handling much of the administrative duties. The acquired distributors also retain their branding and continue to determine their own product mix, based on local needs.
“We help them take their family businesses to their full potential, but we preserve that local brand identity,” McDermott said.
The company also plans to aid growth by focusing on developing it into “the employer of choice in this great industry.” For instance, each employee will become part owners of the company.
Heritage has not mapped out what regions or states it plans to enter first, nor has it set deadlines or goals for how many locations it would like to gain. Instead, McDermott said, it will make determinations based on the quality of the prospects it comes across.
“It’s not about just throwing dots on the map or darts on the board and seeing where we land,” he said. “We’re trying to be intentional in just aligning with the best people out there. We’ll look coast to coast, but it’s not that prescriptive.”
As far as what kinds of companies it seeks, McDermott said Heritage is fairly flexible. However, it does want principals to stay on board for the foreseeable future. Owners looking to exit soon after the sale likely won’t make a good fit, he said.
While PoolCorp currently holds a sizable majority of market share in pool/spa products distribution, “We feel like there’s a space in the market, where you could have two different business models and everybody can co-exist really well,” McDermott said.
Heritage Pool Supply Group and Heritage Landscape Supply Group both belong to the SRS family of distributors, which began with roofing-products warehouses and expanded to include other building products. Between its various brands, SRS currently has 460 locations across 44 states. The company is backed by two private-equity groups — Los Angeles-based Leonard Green & Partners, and Boston-based Berkshire Partners.
