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Private equity has entered the pool industry, and companies looking to acquire thousands of service accounts are knocking on the doors of independent pool professionals.
But what happens when they knock on yours?
In this Insurance Interlude, Steve Sherwood and Pat Grignon discuss what pool company owners need to consider before selling their business, route, or customer accounts. Steve shares his own experience with an acquisition offer and explains why a bigger salary was not enough to convince him to surrender the freedom he spent a decade building.
Pat breaks down several important issues that can follow a sale, including tail coverage, prior claims, non-compete agreements, non-solicitation clauses, and the danger of signing a contract without experienced legal representation.
Selling the business may end your ownership, but it does not automatically eliminate your exposure. A claim connected to work performed before the sale could surface afterward. Depending on the policies and purchase agreement involved, the seller may be required to obtain several years of tail coverage.
The buyer may also restrict where the seller can work, what services they can provide, and whether they can contact former customers or employees. That means the contract could affect far more than the final purchase price.
Pat’s strongest advice is simple: hire an attorney experienced in business acquisitions. Not your uncle who handles divorces. Not your buddy who once fought a traffic ticket. Hire someone who understands deals and can identify exactly where the buyer is receiving the wins while the seller assumes the risk.
In This Episode
- Why private equity is targeting pool service companies
- Steve’s experience receiving an acquisition offer
- Why a higher salary may not replace the freedom of ownership
- What pool company owners should do before considering a sale
- How tail coverage may protect against claims reported after closing
- The difference between occurrence-based and claims-made coverage
- Who typically pays for tail coverage
- Why tail coverage can be surprisingly expensive
- How non-compete and non-solicitation clauses differ
- Restrictions that could prevent you from returning to the pool industry
- Why selling your route does not necessarily end your liability
- The importance of carefully reviewing every restrictive covenant
- Why every seller needs an experienced acquisition attorney
- How to avoid accepting a one-sided purchase agreement
The Bottom Line
Do not become hypnotized by the purchase price.
Before selling the business you spent years building, determine what liabilities remain, what insurance must stay in place, what professional activities will be restricted, and what happens if you later regret the deal.
Get the insurance advice. Get the legal advice. Read the contract. Then read it again.
This episode is intended for general educational purposes and does not constitute legal or insurance advice. Laws, policy terms, and enforceability vary by jurisdiction and circumstance. Consult qualified legal and insurance professionals before selling a business.
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