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So, how are those 2024 fitness resolutions holding up? If you’re anything like us, maybe they’ve started to feel a bit… what’s the word? Oh, right - optional. As we sprint into the heart of the year, it turns out January promises are doing more lounging than lunging. 🛋️😅

But fear not! Today, we’re diving into the world of fitness centres, maybe motivating you to not only explore the industry from a business perspective, but also rediscover those neglected sneakers. 

Let’s jump (no pun intended) in!

Ashdown Capital stands as a specialized partner in the complex world of financing for business acquisitions. With a team of experts led by Michael Hopp, Ashdown Capital excels in providing professional guidance tailored to the unique needs of acquirers. Specializing in cash flow financing, the firm is adept at structuring financing solutions for management buyouts, leveraged buyouts, mergers, and dividend recaps. Their deep understanding of these transactions enables the provision of strategic insights and customized solutions that support clients' acquisition strategies.

Distinct from traditional banking models, Ashdown Capital enhances the buyer's position by initiating a competitive financing process. This approach ensures clients have access to a diverse range of options, aligning with their specific business objectives and enabling informed decision-making for securing the most suitable debt structures for their acquisitions.

Professionals seeking strategic growth through acquisitions and requiring expert financing guidance are encouraged to explore how Ashdown Capital's specialized expertise can assist in achieving acquisition goals with confidence and professionalism.

Follow this link to learn more about how we can help.

INDUSTRY BREAKDOWN

The Fitness Centres Industry in Canada - A Robust Workout for Investors?

The Fitness Centres industry in Canada definitely took a hit during and post-pandemic - we don’t need to remind you of all of the walks and YouTube workouts that we were doing… 🏋️

In the wake of the global pandemic, the industry has not only rebounded but is poised for significant growth, blending the robustness of traditional gyms with the dynamism of a booming boutique sector and digital fitness market. With the help of Bill C-2, fitness centers have exploded with new centers popping up across the country. Attending group yoga, pilates, HIIT, cycling, boxing, etc. has become a regular part of Canadians lifestyle, making the demand for them high and the price per class even higher. Seriously, have you been to a pilates studio lately? $30 for a class + you have to buy $10 grippy socks? Great for business owners, expensive for members. 🤑

Industry Trends

The Canadian fitness scene is riding a wave of innovation and growth, primarily driven by shifting consumer preferences and technological leaps. The boutique fitness segment, offering specialized workouts in cozy, upscale settings, is where the action's most vibrant. These studios have tapped into the latest trends, offering everything from Pilates to high-octane boxing, tailored for a clientele that craves personalization over one-size-fits-all gym memberships. 👟

The federal government's recognition and financial support through Bill C-2 highlights the industry's importance to the country's economic and health recovery (in layman's terms: the government wants to keep the country healthy and is willing to help fund the industry). 💸 Initiatives to further integrate fitness into Canadians' health regimens, such as proposals to make gym memberships a medical tax deduction, demonstrate the industry's potential for further growth and integration into the fabric of Canadian healthcare and wellness​​. 

The Finances 

Financially, the industry has shown robust signs of recovery and growth, with projections indicating a strong rebound from the pandemic's impact. 

The federal support for the industry, including wage and rent subsidies, has been a critical lifeline for many businesses, helping them to stabilize and look towards future growth​​. While the industry faced significant challenges during the pandemic, including the closure of over 40% of businesses, the swift pivot to digital solutions and the government's financial assistance have laid a strong foundation for recovery and growth​​.

Buy or Bust?

So, is diving into Canada's fitness industry a sprint toward success or a potential stumble? Given the robust growth of boutique fitness studios and the expanding digital fitness market, the signs point to a resounding yes for investment. The key to success lies in tapping into the latest trends—personalization, digital innovation, and a holistic approach to health and wellness. For those ready to jump in, the fitness industry offers a dynamic landscape with significant potential for growth. 

Check out these current Fitness Studios for sale:

1. Specialty Pilates Studio in Vancouver, British Columbia - $250,000

2. Profitable 4+ Year Gym in Barrie, Ontario - $650,000

3. Upscale Fitness and Esthetics Studio in Airdrie, Alberta - $199,000

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled in upcoming issues. 👀 

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DEAL REVIEW

High-Margin Fitness Studio with Hands-Off Owner

This week’s deal is a Fitness Studio with a 30+ Year History in Victoria, British Columbia.  

Deal Facts 🔥

Green Flags 🟢

• Longevity and Profitability: The business has been operational for nearly 30 years and has maintained profitability, indicating a stable and potentially resilient operation. This history suggests it has weathered various economic cycles successfully.

• Strong Brand and Unique Offering: The emphasis on nutrition, fat loss, coaching, and accountability, coupled with fitness-focused martial arts activities, provides a unique value proposition compared to traditional fitness or weight loss programs.

• Operational Independence: With a full-time General Manager handling day-to-day operations, the business allows for minimal oversight from the owner, making it attractive for both investors and owner/operators.

• Strategic Location: The studio's placement in a busy strip mall with ample parking and proximity to a high school enhances its accessibility and potential foot traffic. The relationship with the landlords and an affordable, renewable lease are also advantageous.

• Effective Marketing Strategy: A shift towards digital marketing strategies, including social media and email promotions, indicates adaptability and an understanding of effective modern marketing channels.

Red Flags 🔴

• Dependence on Key Personnel: The presence of a full-time General Manager crucial for daily operations could pose a risk if this individual were to leave, especially if they possess unique skills or relationships vital to the business.

• Market and Industry Competition: The fitness industry is highly competitive, with constant changes in consumer preferences and the threat of new, innovative fitness solutions. The business's ability to continue adapting is crucial.

• Limited Growth Indicators: While the business has been profitable, the provided financials (revenue: $468,110, SDE: $124,891, EBITDA: $74,891) suggest there is a ceiling to current growth strategies. Prospective buyers should evaluate the potential for further expansion.

• Potential for Lease Issues: Despite a good relationship with the landlords and an affordable lease, the future of this aspect remains uncertain beyond the current terms. Lease renewals or changes in terms could affect profitability.

• Owner's Reason for Selling: While moving on to new projects is a legitimate reason, buyers should conduct due diligence to ensure there are no underlying issues with the business that are prompting the sale.

Watch Our Video Breakdown 

For a more in-depth analysis, check out this video deep dive of the deal by our Founder, Morgan Tate:

Possible Deal Structure: Explore adding an incentive for the General Manager to both retain + increase revenues from existing clients post-transaction. For example, a performance bonus based on increased earnings (tie the performance bonus to EBITDA and not revenue) 12 months after the purchase is complete.  

Last time, 32% of you thought this Addiction & Mental Health Company was right up their alley! 👀

Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

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GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

1. Between lay-offs, corporate burn-out, and the cost of groceries these days, everyone wants to be a business owner. But who has the money for a downpayment on a house, let alone a business? Rumour has it you can buy a business with no money down, but is that really true? The short answer: yes!

2. After reading the article above about buying a business with no money down, you may have decided that an SBA loan is the way to go. But before you book a meeting with the first SBA loaner you find in a google search (word of advice - don’t do that), here is what small business buyers need to know about SBA loans.

3. As a savvy business buyer (which of course you are) we are sure you have heard about people selling their business… but have you heard about selling your business to the same buyer twice? Learn why some sellers are thinking about taking this route! 👀

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