After years in the boating industry as CEO of Premier Pontoons, Rick Gallagher has found adjusting to life in the hot tub industry surprisingly smooth.
“It’s been an incredibly pleasant surprise,” Gallagher says. “What a unique opportunity and a unique time to come into the industry.”
Last spring, while the pandemic was still driving up demand in the hot tub industry to unprecedented levels, Gallagher began his first official day as CEO of a newly formed — as yet unnamed — platform. The platform would oversee Marquis Hot Tubs, Artesian Spas and as of November of 2022, Nordic Hot Tubs. The change meant uprooting his family from their Minneapolis, Minnesota, suburb and moving them more than 1,600 miles west to Las Vegas. “It was an adventure, but my wife and kids have taken the move in stride,” Gallagher says.
The platform was the creation of Monomoy Capital Partners, a private equity firm. Gallagher admits some skepticism when first approached by the firm. “We’ve all heard the stories about private equity and what that can look like,” he says.
Private equities represent a group of outside investors who pool their money to purchase a company, work to make that company profitable, then sell it to make a profit. Gallagher, who oversaw Premier Pontoons emergence from bankruptcy in 2018, had no interest in participating in private equity. “Most private equity seems interested in ringing the last ounce of water out of a washcloth and then setting it on fire, and that just wasn’t who I wanted to work with,” Gallagher says. “We had some really frank conversations in the beginning, assuring each other that wasn’t how this private equity firm operated.”
He is collaborative and big on communication. He takes aim before pulling the trigger. He is clear, decisive but approachable.”
Noble Hibbs, Marquis
According to Gallagher, he took the job only after it became clear that Monomoy Capital Partners appreciated that investing in such a platform meant understanding its long-term value, and that its long-term value was tied directly to its employees. “They recognize the value in how we treat our people and the kind of employer we can be,” he explains. “So, in that way, it is a privilege to lead this platform.”
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Gallagher can confidently espouse the importance the platform’s employees to the success of its future thanks to the role those employees played in the development of its past. Marquis, for example, founded in 1980 in Dallas, Oregon, under the name Pacific Spas, had been an entirely employee-owned company since 2001. For Monomoy Capital Partners to purchase Marquis, a majority of the employees had to agree to the sale. “The votes were something like, 95% yes,” says Noble Hibbs, corporate communications manager for Marquis, and one of its former owners. “It was an overwhelming vote in favor. There was constant change throughout the pandemic. Thinking one thing and then another would happen. It was very unpredictable. And then the acquisition, which was sort of like being shot out of a cannon.”
If the initial acquisition of Marquis and Artesian Spas was akin to being shot out of a canon, the recent purchase of Nordic Hot Tubs was a good indication that the iron bearing was nowhere near losing its velocity. According to Hibbs, Gallagher seems uniquely qualified to steer such an ambitious undertaking, due in part to his dedication to teamwork and utilizing the talents of those around him. “He is collaborative and big on communication,” Hibbs says. “He takes aim before pulling the trigger. He is clear, decisive but approachable.”
Why did Monomoy Capital Partners choose these specific three companies, which are dramatically different, both in culture, target audience and geographical locations? Gallagher says that “there’s very little cross-selling.” However, he adds, there are still a dozen dealers that sell both Marquis and Artesian products, and he believes the differences between the brands are actually complementary. “We don’t have to worry about cannibalizing sales of one to another. We’re not trying to blend the dealer networks together and carve out real estate for super dealers,” Gallagher explains. “Nor are we looking to blend the product lines.”
While Marquis and Artesian may seem like an unlikely pairing, Gallagher points out that the addition of Nordic has helped break the mold, and that the Nordic product line is complementary to both brands. “Nordic has a stellar reputation and value,” he says, adding that they’ve already had success getting Nordic cross-sold by both Marquis and Artesian dealers.
From Gallagher’s perspective, the recent dramatic changes in the industry are an indication that many dealers will be open to adjusting their floors for whatever the new-normal might be. What that new normal will look like is still in the air, but Gallagher says he has surrounded himself with the kind of sharp-minded and talented innovators who will help decide that answer going forward. “We just see so much progress,” Gallagher says. “We’ve put together some strategic workshops and pulled different team members together across companies on the platform. There’s such an opportunity to share best practices across all the plants and to bring folks together.”
Gallagher says that the companies’ sales leaders met recently to discuss strategies and ways in which different sides of the platform could benefit one another. “Everybody left that meeting super pumped because they could just see the opportunity and we’ve already seen results come out of it,” he says.
Since taking over, Gallagher has noticed many areas in which the spa industry and the boat industry are similar. He says, however, that one quote rings true to him regardless of the industry. “ ‘Business is like tennis. Those who serve well, win,’ ” Gallagher says. “And really, that’s who we aim to be. We want to serve people with excellence. We want to serve dealers, customers and certainly shareholders, with excellence. But we also want to serve our employees and our vendors with excellence.”