Private equity firms are increasingly turning to the swimming pool services sector as a new source of reliable recurring revenue amid volatility in software-as-a-service (SaaS) investments. The approach, sometimes referred to as "swimming as a service," involves consolidating numerous small local pool builders and repair companies to create larger, national platforms.
Several private equity-backed companies have aggressively acquired local pool service businesses to capitalize on the industry's fragmentation. SPS Poolcare and Pool Troopers, two leading consolidators, together purchased over 200 firms before merging earlier this year. Meanwhile, Main Street Capital, a smaller listed private equity firm, has seen the value of its equity stake in Cody Pools increase sevenfold since its acquisition at the height of the coronavirus pandemic.
This trend contrasts with the public market performance of pool-related companies, which have faced significant setbacks following a pandemic-driven boom. For instance, shares of Pool Corp, the largest wholesale supplier of pool equipment in the US, have dropped more than 70% from peak levels, including a 27% decline year to date. Market analysts note that while pool construction surged temporarily due to increased homeworking, staycations, and low interest rates, new pool installations are expected to decline for a fifth consecutive year.
Despite this cyclical downturn in new pool builds, private equity investors see potential in the ongoing maintenance and servicing market. With more than 10 million pools installed in the US, regular cleaning and repair services are considered essential and less discretionary than initial pool purchases. This results in steady, subscription-like revenue streams that are attractive to buyout firms seeking stable, long-term cash flow.
Although expanding pool services operations faces operational challenges—including more complex logistics and staffing needs compared to software businesses—there are notable benefits in centralizing services and leveraging buying power with suppliers. The total market size, while smaller than in sectors like tech, has proven appealing mostly to lower- and middle-market investors.
The swimming pool sector's consolidation mirrors trends in related home-enhancement industries such as heating, ventilation, and air conditioning (HVAC), which has seen over 1,100 acquisitions since 2020. Mid-market specialists have successfully rolled up small companies until achieving scale sufficient to attract investment from larger buyout firms, exemplified by Blackstone’s $2.5 billion acquisition of Champions Group earlier this year.
Other trades, including garage doors, pest control, and plumbing, are similarly following this playbook, aiming to build platforms offering essential, subscription-based home services. Although these businesses may not generate the massive valuations associated with technology or AI, their services address tangible consumer needs and provide a degree of stability and security that investors find compelling.