Stability, White Space and Robust Management Teams at Forefront of Fitness Business Valuations
Valuations stabilize in fitness as investment focus shifts to white space and robust management.
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Eagle Merchant Partners recently invested in Aligned Fitness, a Club Pilates franchisee, aiming for growth in acquisitions and new openings. Despite a decline from post-pandemic highs, experts note the fitness sector's valuations show stability, highlighting discernment among buyers regarding business integration and growth potential.
Why It Matters
This suggests that multi-unit operators may need to assess their portfolios for growth potential and reassess unit economics, as fitness valuations may shift with competition and operational costs.
Eagle Merchant Partners has recently acquired a majority stake in Aligned Fitness, a franchisee of Club Pilates, signaling a renewed interest in the fitness sector. This move taps into the growing trend of valuations focusing on 'white space' opportunities, where investors look for potential growth through acquisitions or new locations. Despite a decrease in valuations since the pandemic surge, industry experts assert that fitness business valuations remain stable. Jake Rubenstein, Vice President at Eagle Merchant Partners, noted that buyers are becoming more discerning, paying closer attention to business integration, growth rights, and management teams, leading to a wider valuation spread among different asset grades.
Aligned Fitness operates 34 Club Pilates locations, augmenting its portfolio with a six-unit franchisee and a three-unit franchisee. Rubenstein emphasized the longevity of Pilates as a workout option, arguing its complementary role in the larger fitness market, stating, “With Club Pilates, we felt very strong about the fact that Pilates has been around for 100 years, and there’s been a mass adoption in the last 20.” This acquisition marks Eagle Merchant's return to the fitness domain after exiting in 2018 following the sale of United PF Partners, a significant Planet Fitness franchisee.
