Parting with a Partner

In 2002, Thomas Fitzsimmons thought he’d found the perfect solution.

The president of Chux Landscaping, Pine Brook, N.J., had started a lucrative business designing pools for his high-end clients. He would sell and design the jobs, and then subcontract the construction. But he wanted to bring the whole operation in house, and so he and Charles Baldissard, already his 50-50 partner and operations manager, decided to hire a minority partner.

The new partner already worked for a large pool company and also wanted to help Chux Landscaping expand its pool business.

“It gave us the incentive to start a pool division,” Fitzsimmons says. “It was really a fluke that my vision of where I wanted to take the company was something he wanted and could do. He was the right person for both scenarios.”

So, the $3 million-a-year company branched out from its traditional base of landscape architecture and general contracting, and started Artisan Pools.

“It really was a nice mix to have because you’re on all of these projects. We really became a full-service design build firm. I don’t regret doing it,” Fitzsimmons says. “It was something my current partner and I always had a vision and a dream to develop.”

But the dream just wasn’t meant to be. Fitzsimmons started receiving complaints from customers about the work being performed. “What hit close to home and what struck me as problematic were the customer complaints and service issues,” he shares. “It was really kind of spiraling out of control.”

And, he adds, at the high-end of the market, “you’re selling yourself. People expect the world of you at that level. When their expectations aren’t being met or exceeded, you have to do something about it.”

So last year, Fitzsimmons and Baldissard bought out the minority partner. When the partner was in charge of the pool division, Fitzsimmons wasn’t involved with the management of the projects himself. “Now I am,” he says. 

He offers this advice to contractors who are planning to bring on a partner:

• Draft a detailed compensation agreement.
• Include a plan in the contract for breaking the partnership.
• Make sure everyone understands the company’s business plan.
• Try a sliding scale of equity, where the new partner earns a certain amount of value in the company after he meets certain benchmarks or sales volumes.
• Have a plan in place covering who is responsible for repairs to work performed after the partnership is broken.

But Fitzsimmons doesn’t regret the experience. Rather it provided the company with the incentive to add on a pool division, which sets Chux apart from its competitors. And with the partner gone, Fitzsimmons was also able to promote his foreman to manager. He says: “I wouldn’t do it again, but I don’t regret it – it did help launch a new service.” 

The author is associate editor of Lawn & Landscape. Reach him at cbowen@giemedia.com.