They Want $3.75M for This Pool Club? Analyzing a 56x Earnings Deal
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Sometimes when the listing is so bad, I'm like, "Huh, well, maybe this is worth a treasure hunt to see it for something here." And 99 times out of 100, they're like, "Maybe there's something about this." It's a gift then. I had a client who said the best deal they ever acquired was based on the worst listing they'd ever seen.

All right. So the meta game is this philosophy is going to get around, look for the bad listings that make no sense. Then brokers are going to purposely make them worse to entice people who they think they know. It's going to be a virtuous circle here. I'm just saying miracles do happen. And a lot of times miracles happen because the listing is this bad.

Hey everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called Capital Pad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So Capital Pad is a marketplace for acquisition entrepreneurs. That is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest

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Welcome to Acquisitions Anonymous. Michael here. Today's deal was fascinating. We went through a deal that was priced at 55 times earnings, and we still did it on the podcast. So it involved New Jersey and a swimming pool. So it was a ton of mystery and a ton of fun. And Travis Jamison from Capital Pad, he joined us today. He was a great guest co-host as well. And Heather and I had a ton of fun. Here's the episode.

Travis, man, it's so good to see you. Welcome. Thanks for having me again. It's good to be here. So how's the new business going? Give us an update. I think Capital Pad's kind of crushing it. Now it's crushing me, too, because it's a ton of work, to be honest. But we're onboarding investors, onboarding sponsors, looking at good deals all the time. So no, we're really, really happy with where things are at right now.

So in terms of kind of the ICP for both ends of it, like deals and like investors, who does that tend to tend to be on each side of the kind of the marketplace? For the sponsor searcher side, it really is just pretty much all searchers and independent sponsors. As long as searchers, their deal has to be a little bit larger than some of the teeny tiny ones. But, you know, the standard searcher stuff is...

And the independent sponsors, they bring their deals and submit them to us. If they pass all our tests, then we submit them live and share them with the investors. Then the investors get to look through the deals and see if it's something they might like to invest in.

Well, I mean, I think it's Heather, you've gone through this experience. I think it's, it's like the more you are forced to kind of talk about your business over and over again, eventually your pitch gets like super crisp. So yeah, you're early, man. I got to give yourself some grace in it. So,

Heather, how many times have you pitched your business in the past year? Oh, gosh. Well, I actually do a weekly. So if those of you haven't been to it, I do a Tuesday webinar every week. And when you do something weekly, you get really good at it. And I get live Q&A. So that's how I've kind of sharpened up my pitch.

All right. Let me pitch you guys. And I've been to your webinar. They're really good. And I even asked questions under my own name. Yeah, you heckled me, I think. Right. No, no, I did not. I did not. I want the record to show I did not do that. No, I usually ask when I go to webinars, ask questions anonymously. So I don't I don't ask anything embarrassing. Dumb questions, dumb questions to go.

All right, so I brought a deal. It is this popular swim club and it's in New Jersey. And Heather, I know how you feel about New Jersey.

Actually, how do you feel about that? New Jersey sure is all I know. It's like that, right? I do know that New Jersey spends more money per capita than anywhere else on home maintenance in the US. Really? Why is that? I don't know. We did a deal there and that's kind of where I learned that fact. I think a lot of the housing's really old and it's still very valuable.

And so it just needs a lot of money for upkeep. Like it's a meaningful percentage of people's incomes, like averaged out that they spend on upkeep. So the home services market is really strong in Jersey. House prices are unbelievable, especially like on the shore. Like I've looked at some of these prices now. You know, I went to college in Eastern Pennsylvania. So we were right on the New Jersey borders, like 60% of my house.

from New Jersey. Some of the houses these guys grew up in 30 years later are like $4 and $5 million, $10 million houses. Just incredible price appreciation on the Jersey area. Also, there's some amazing houses. The style is old and beautiful and you don't necessarily see as much anymore. My college roommate grew up in this town. I'll pull it up here. Spring Lake, New Jersey. It's become just like

It looks like Mayberry on water, to your point, Travis. Amazing. There's a slight downside. Ten million dollar houses now. All right. Speaking of, let me pitch you guys on this deal. So it is on Murphy Business Brokers, which I guess is a franchise system. I didn't know it was franchise business brokers. Is that right, Heather? Yeah, just like Transworld. It's a franchise. Yeah.

Yeah. Super interesting. Okay. So it has a picture of a group of people jumping into a pool and it says popular swim club for sale. It's brokered by Darren Smith, who has a 973 area code, which I assume is New Jersey.

And the title is Popular Swim Club for Sale. $3.75 million is the asking price. It does $612,000 in sales. They're asking for no seller financing. So down payment is $3.75 million. And the thing does $67,000 as discretionary earnings. So, okay. Usually Bill jumps in. I get that.

I'm squirming. I don't know if I need Bill here. You do 3.75 million divided by 67,000 a year. It is 56 times earnings. Oh, goodness. Yeah, we're off to a good start. It's a price for growth.

So the broker says,

snack bar with a state-of-the-art kitchen, a well-maintained pool, a toddler pool, a slide pool, and ample grass space. The club has significant potential for the addition of various amenities to enhance its appeal and functionality. Twin Club is nestled in a thriving community that values recreational and social activities, and the club is easily accessible, making it a popular destination for families and individuals seeking leisure and community engagement.

Swim clubs are an integral part of New Jersey's culture, fostering a sense of community and providing a gathering place for families and friends. The swim club has established itself as a beloved local institution with a loyal membership base and a reputation for excellence. Detailed financial information, including historical performance, membership data, and revenue streams will be provided upon signing an NDA.

It has a stable membership base, a loyal, engaged membership community with a consistent annual renewal of revenue streams, diverse revenue sources, including membership fees, fund lessons, event rentals, and concessions. There is significant opportunity to increase the revenue through development of additional amenities and services. Please, no phone calls. Serious buyers should inquire online only.

Has $143,000 in furnishers, fixtures, and equipment, and $5.1 million in total assets, $54,000 in liabilities, and a $5 million valuation of the real estate. So, yeah. So you're not getting the real estate? Yeah. You're not getting the real estate? Well, now I'm confused. I thought we were. Yeah, it's like it's a real estate play, right? Like, no. Right. But now below it's saying the real estate's worth $5 million. They're selling for $3,750,000. So...

I'm confused. And also he put his phone number clearly on the page and said, no phone calls. That bothers me. Don't ever call me. Do not call. So, so let's maybe, let's maybe start with what, what does this business do? Heather, do you want to take a stab at that? Yes. I think I've seen something like this in Northern California. Someone was trying to take a run at something similar. So it's like in a community, like,

It's a community pool, basically. So you can you can pay for a membership and your family can go there for the for the swim season. And they're basically paying dues. And, you know, the owner is using the dues to keep the place up.

And obviously you talked earlier about appreciation of real estate in New Jersey. And I think this is a business that's kind of suffered from that in that you have this big mismatch between what the real estate is worth and what the business is worth. The cashflow of the business is really, really sparse. And but the real estate might be worth a lot more as perhaps something else kind of says, this is maybe not the highest and best use of this property. And,

And so that is what I think it is. It is just a private swim club where people pay dues to use it. Is this could this possibly be like a poor man's golf club? Kind of like that, you know, similar like the gentleman farmer type thing where are people really into the swimming niche? I guess you say and they just want to hang out around other people doing that. Is that a thing? I don't know about that. So I think I worked at a.

like almost identical place to this as a, uh, as a college summer, um, lifeguard here in San Antonio. Um, and I'll show his place to you. And basically I'll walk, I'll walk through how the, the model works for these guys. Um, and I think they do pretty well. The difference is these guys local here to me, um, have a different capital structure. They don't own the land. Um,

But it's this place here. So I used to like I grew up like a couple of miles from this pool and it was a pool that was built by the city back in the 40s. And it got it got kind of run down and some local investors in my little kind of inner suburb, you know,

I live in a Bucci inner suburb. So we haven't talked about that. So they basically went in and went to the city of our little our little city called Alam Heights, who owns this land and said, hey, we want to sign a ground lease with you to take over the pool. We'll renovate it. We'll fix it up and we'll make it a place where people come and sign up for memberships.

each summer and they pay six or 700 bucks to be able to come and use the pool for the summer. And then you buy a kind of, you know, snack bar and well here it looks like there's somebody, I don't know. There's some weird stuff, but they sell, uh,

It's the Antonio guys. We're still catching up to the 19th century down here. But, you know, they fixed it up and they rent it from the city. And I think they maybe rent it for basically nothing. And then they have coaches during the summer and then they have people come in to work it, you know, just temporarily from kind of May until school starts. And then they shut it down each year.

But it's precisely this. It's just a pool, a snack bar and, you know, and bathrooms. And subsidized by the city the way you're talking about it, because it's a zero dollar ground lease, we're assuming. Right. So the city probably takes responsibility for the upkeep of the pool, at least some of it. So I think you can make something like this work if you've got some subsidy.

But if you own the whole thing and you've got to do it all, you need a pretty good income stream to take care of all that. Yeah. Oh, and if you see this picture here, if you're on YouTube, I sat in that chair like I was a lifeguard. You were the lifeguard. Oh, my God. Yeah. 30 years ago. This pool's been around for a while. Did you rescue anybody?

A couple of times I jumped in, but yeah, it's a, I, lifeguarding is a really hard job. I don't, for me at least in the way I'm wired, like sitting there for eight hours a day with nothing happening. And it's a huge amount of asymmetric risk because you basically like your best case is nothing happens. Worst case is someone dies and you're 16 years old and it happens under your watch. Like screw it.

Anyway, I do not recommend lifeguarding his job for this reason. So was that too much information? No, that was interesting. But back to the one we're looking at, they own the real estate and I think that's the big difference. Yeah. And this is where those weird listings where, is it a real estate listing or is it a, are they saying that it's worth $5 million, but no, we'll give it to you for 3.7. Like, is that, is that the place? Otherwise this is just nonsensical, right? Yeah.

Hi, Heather here. When I'm not breaking down deals with these guys, I'm helping people get the right SBA loans for their business acquisitions. Because when you're buying a business, the best financing isn't one size fits all. There's the best rate, fastest to close, the specific loan structure that you need, or a little of all of those things. That's why my company, Viso Business Capital, works with over 30 different lenders to find you the best funding in less time and with less friction so you can focus on the deal. Sign up for a free live Q&A session on SBA loans at

I don't know. What headspace could somebody be in to buy this? That's a legitimate question. Why would somebody buy this at that multiple? Well, so the one I looked at, the buyer that was considering it, it was a tennis club at a pool club, but very similar to this.

and they thought that they could develop all these other revenue streams. So I think the listing sort of says that, like, oh, you could do all these other things. But when they really sat down and tried to do a feasibility study on that, there was no way they were going to generate enough revenue for the value of the real estate. And then they looked at, you know, the problem for the seller, at least in that case, was that the way the property was zoned, it really couldn't be used for anything else.

So it's kind of a trap. Like, is the real estate really isn't worth that much if you're sort of stuck with this use and you can't get enough cash flow out of this use? So I think it's kind of a it's kind of a sticky situation for whoever owns this. Frankly, they've got to get the revenues up. It's only six hundred and twelve thousand gross revenue. So, you know, they would this the owner of this place needs to work on that.

I think before they can sell it, you're kind of limited. I mean, I don't imagine the outdoor pool season in New Jersey is too long, right? Three, four months max. Right. Yeah.

We have some relatives in New England. Most people get into water that I would consider cold enough to be a chilled iced tea in San Antonio. It basically has ice cubes in it. Cold plunges. It's crazy. People start getting into these things in May when it's just barely sunny. Another weird...

tidbit from a deal we did. The kind of the tri-state area, I think is the third largest pool servicing market in the U S um, Texas and Florida are number one, I believe. Um, and then it comes like the New York, New Jersey area. Don't know how it works. A lot of it's probably indoor, but a lot of the revenue from servicing, it comes from opening and closing the pools, which might not happen in different areas as much. Yeah. Yeah.

Right. So if you kind of break down, just trying to build a revenue model for these guys, like how are they getting $612,000 in sales? So if you do $800 a season,

So that's basically $200 a month for the four month swim season. And you say you have 600 members, which I think was plus or minus kind of where the pool near me had. That gives you 480,000 in top line revenue. And then together 130 ish you're doing in beverage sales. The, the actual, I didn't mention it, the big revenue driver for that pool near me, they have waiters and waitresses that come around and serve alcohol to people. Um,

It is basically, it is out of control how much people are. Let me just say, we're very fortunate that most of the pool is like very shallow. Like it's standing room only. You go over there like on a mid-August day and there will just be like 75 parents sitting in the pool.

And just everybody has one of those. Do they do this in other places? Texas loves to do this. These big styrofoam cups, just full of alcohol. Do they do that in your places? Yeah. I think it sounds like a Texas thing. Yeah. I don't know about that one. This is one of the weirdest Texas thing. It's basically like nobody wants to like show off that they're like drinking a tall boy or whatever, or like they're drinking a hardcore mixed drink. So they put them in these, like the cheapest, uh,

giant 32 ounce or 48 ounce styrofoam cups. So if you see somebody out like partying,

Like that's what's going on with the giant styrofoam cup. Like everybody does it in Texas. I don't know why. This is a great place. This did not mention a liquor license. And I do think you're right. That's a, that could be a big source of revenue, but you know, a lot of places wouldn't allow this kind of property to have a liquor license. So how do you convince the regulators? Like, yeah, we've got this pool. We won't be able to get really drunk here. I promise it's safe. I promise. Yeah.

So, yeah, so that's probably that's probably how you get to six hundred twelve thousand. And then their earnings, it looks like they're running about a 10 percent profit margin on that. So sixty seven thousand. Like it's all getting eaten up by paying lifeguards and staff and liability insurance. Yeah. You know, with a listing like this.

The broker should really probably give some sort of hint at how why someone would pay for this. Right. Because if someone's just like a financial buyer come through, like they just skip over it, like give give a hint of why they would want to own this. I feel like otherwise it'll stay here for years.

By the way, one of the things we've been coached on Travis is to argue about stuff. I'm going to argue with you, but it's met with love. It's a fake argument. Here's the other side for where I like stuff like this, is when there's a listing like this that makes no sense whatsoever, it presents an opportunity for us as potential buyers. Nobody in their right mind is going to open this up and be like, "You know what I want is a boot club at 55 times earnings."

But when you see something that's crazy like this, that means 99.9% of people are going to swipe right on this. And I think this would be one I would potentially call on because it's just like, no, no, you can't call. You can't call. Can I text? No, can't do that. You have to use email. But anyway, like I, sometimes when the listing is so bad, I'm like,

I'm like, well, maybe this is worth a treasure hunt to see if there's something here. And 99 times out of 100, there isn't. But maybe there's something about this that's just like, I mean, for example, you could look at it and of those seven acres, six of them are totally unused. And potentially you could do a deal where you sell that, right? And get more than your purchase price for the whole thing. And you're left with a one acre pool. You rent it to some other sucker and you end up

I'm just saying miracles do happen. And a lot of times miracles happen because the listing is this bad. It's a gift then. Well, to your point, I had a client who said the best deal they ever acquired was based on the worst listing they'd ever seen. And it was literally like a like a legal size sheet of paper that the listing was typed on.

And the broker really didn't understand the business and kind of did their best. And this person looked into it and it was a really good business behind that. So it does happen. All right. So the metagame is this philosophy is going to get around, look for the bad listings that make no sense. Then brokers are going to purposely make them worse to entice people who they think they know. It's going to be a virtuous circle here.

I think so too. So anybody who's looking at any of my stuff, when I start to sell it, I'm going to give you a SIM that's basically written on a cocktail napkin and with snot on it. So then you'll know it's good deal. You should pay me whatever I'm asking. All right. Well, Heather, you're going to buy this one? Definitely not. No. I am going to call Darren though.

Hey, I heard you like phone calls. Travis, would this make it through the capital pads? I mean, as soon as I opened it, I would just close it. I guess we didn't talk about financing something like this. There's no way to finance this, Heather. You actually need cash flow to pay a loan. I don't know if people knew that. Yeah.

Yeah, I think so. Heather, your thumbs down. Travis, where's your where's your radio? I'll just say thumbs down and be polite. I think I have thumbs down, too. But just from I kind of want to reach out to the guy because it's just so crazy. Just so great. Like who who who's the who is he targeting as the buyer for this? You have any idea? Yeah.

That was my big question. Like, give us a hint of why someone would want this. Covered land play? I mean, maybe? All right. Well, I guess you've got to kiss a lot of frogs. This frog appears to be disgustingly ugly and crazy. We'll figure it out. Anything else on this one? Otherwise, we'll wind it down here.

Awesome. All right, everybody. So, Travis, people can find what you're working on at CapitalPad.com. Is that right? Yep. CapitalPad.com. If you're a searcher, bring your deal, post LOI, pitch it to us. If it looks good, we present to the investors. If you're an accredited investor, come check it out. We've got maybe one to two deals at a time that we think are good enough to pass. So you can invest there.

That's amazing. And Heather, you're at viso.net? visocap.net. And yeah, if you're interested, check out my, my Tuesday webinar. I do it every week.

And, you know, we're always looking at lots of deals and making sure they get to the right lenders and get the best terms. I want to go to your webinar. I just saw your presentation like a week or two ago at the conference, and it was great. I mean, I knew all this or half this stuff, and I was the front seat just engaged. So, yeah, I want to see your webinar now.

How was S&Bash? You guys are both there, right? Yeah. The same week as my conference. Next year, we're not going to have them the same week. I actually talked to Kevin. I was like, dude, how do you guys have it at the same time? He's like, we're working on that for next year. He told me. I thought the conference was great, actually. It was. Yeah. Yeah. This is my first one. So I go in with low expectations, but it was really good. The conference,

Content quality was really high, but the people themselves, I described as a very low ego bunch. You didn't know who had a $50 million or who was a searcher with no money. You couldn't tell the difference. And that was really nice. We did have a couple of people, some brave souls, who went to Holdco Conference and SM Bash. They were crazy. They showed up looking very tired, but they did it. That's very incredible. Well, we're moving to February next year.

And then I think they're going to stick to April, May. So that should be perfect. So I should be able to, are you sure? I swore they said they were moving to February, but okay. Yeah. Like double check. I don't know. No, no. Well, I said he's been talking to CM Rosati. Okay. Um, yeah, at our conference, it was pretty awesome. Um,

you know, in parallel to how we talked about how we find deals for the podcast, I've delegated the whole thing. But people would walk up to me and be like, Hey, I have a question about like X, Y, Z thing. I'm like,

It's like, I'm like, look, I'm just the face here. Like, I don't know. They don't even, they didn't even let me be on the, there was like an organizer chat, you know, where they were dealing with issues. I was like, Hey, is there going to be like an organizer chat? Like, can I be on it? They're like, yeah, sure. And then they never put me on it. So that was my level of responsibility. Ty says, Ty had told me he was talking to Sam. We'll coordinate. So he goes,

Well, the feedback on Holdco was fantastic. I had a couple of our Snowball members that went. They said it was great. The venue was great. The pictures, they showed some pictures. Gorgeous looking. Absolutely gorgeous.

Heather, next year, this is your pick. Next year. There were so many conferences in the same two-week period this year. I don't know what happened. But next year will be spread out, hopefully. Well, hopefully we can do a live episode of the pod, which we've done. Ooh, that'd be fun. Travis could be part of it. I'm down. I'm down. Audience participation. They can heckle us while we're doing it. That'd be good. It's actually pretty good feedback. All right, everybody. We'll see you next week. Ciao.