Resources

Situation

At the time of the sale, family-owned Great Plains Supply had been operating in Lenexa, Kansas, since 1984, when Steve Reiff founded the company after spending 25 years working for industry manufacturers. The company was also operating in the Gulf Coast area through its Houston-based subsidiary Pool and Spa Products, a company Jay Patterson founded in 1986. Reiff acquired a majority interest in Pool and Spa Products in 1992. The Patterson family remained in a minority ownership position with Jay. Eventually his son Blake transitioned into his father’s role as president of the Houston office.

When Reiff and his wife retired in early 2019, their daughter Susan Ahn took over as president of the company. Aware of the increase in M&A activity leading to consolidation in the pool supplies industry, Ahn and her parents, who all collectively owned the majority of the company at this time, began thinking about the possibility of eventually selling. Although Ahn was not planning to sell or retire immediately, she wanted to be prepared when the time came, so she contacted CCCA in late 2021 for guidance.

CCCA educated the client about the due diligence process and what to expect (e.g., document requests, financial questions, etc.). Throughout the closing process, CCCA acted as an intermediary between buyer, seller and third parties such as attorneys and accountants, which allowed our client to continue focusing on daily business operations.

Approach

With any business, there are numerous ways owners can properly position their companies ahead of a sale. Factors like sophisticated financial reporting, reaching a certain size threshold, increased revenue and customer diversification, and improving margins are among the items that help increase a company’s valuation at the time of sale. Knowing Ahn had time to plan for a sale, CCCA advised her on ways she could prepare the company to attract more buyers at their initial meeting with her.

Within months of the meeting, Ahn was approached by an unsolicited buyer that was interested in diversifying its products and services by entering the pool supply industry. The potential buyer, St. Louis-based Marcone Supply, is one of the world’s largest authorized distributors of household appliance, HVAC and plumbing parts.

CCCA engaged with Marcone’s team to further evaluate their interest and to confidentially share information about Great Plains Supply. Marcone made an offer in May 2022, and CCCA helped our client evaluate it from a financial standpoint and culture fit. Often when buyers make a direct offer to a company, it may not necessarily be their best and final offer because they know they are not competing with other buyers. Having CCCA as an advisor representing Great Plains helped ensure Marcone would have to provide a compelling offer to limit the chance of Great Plains negotiating with other potential buyers. Ultimately, our client was comfortable with the dollar value of the offer and felt confident with Marcone continuing as future stewards of the company.

After both parties signed a letter of intent, Marcone conducted thorough due diligence efforts. CCCA educated Ahn about the due diligence process and what to expect (e.g., document requests, financial questions, etc.). Throughout the closing process, CCCA acted as an intermediary between buyer, seller and third parties such as attorneys and accountants, which allowed our client to continue focusing on daily business operations.

Outcome

The deal, which closed in August 2022, marked Marcone Supply’s entrance into the $10 billion pool and spa distribution space, further expanding its product portfolio. Both the Great Plains Supply and the Pool and Spa Products names were retained, and Susan Ahn has continued as the company president.

Besides the financial outcome of the sale for our client, the deal provided Great Plains Supply with established back-office systems integration (accounting, technology and distribution). Marcone plans to aggressively grow Great Plains Supply’s market share while pursuing additional pool and spa distribution acquisition targets to expand its overall footprint in the space.

Insight

We often hear, after the fact, about deals in which a company took the first offer they were given from a prospective buyer without consulting with an M&A advisor. Many times, it’s not the best offer the company could have gotten on the open market, where buyers may have competed and an advisor was at the table to shepherd the seller through any potential deal hurdles. CC Capital Advisors can work with companies to ensure they know their options, assist them with navigating through the challenges of a deal, and help them make decisions that are in their best interest.

CC Capital Advisors (CCCA) acted as the exclusive financial advisor to Great Plains Supply, a wholesale distributor of swimming pool and spa supplies and products, on its sale to Marcone Supply and its financial sponsor Genstar Capital.