By Abigail Summerville
NEW YORK (Reuters) – Buyout firm TPG is weighing a possible sale of Crunch Fitness that could value the gym chain at more than $1.5 billion, including debt, people familiar with the matter told Reuters on Tuesday.
TPG, which acquired Crunch Fitness through its acquisition arm that focuses on small and medium-sized acquisitions, is working with investment bank Jefferies on a sale process that could launch during the first half of next year, one of the companies said. sources, who requested anonymity. since the matter is confidential.
TPG and Jefferies declined to comment. Crunch Fitness did not immediately respond to a request for comment.
Potential buyers of Crunch Fitness include other private equity firms, the sources said.
Based on comparable transactions in the industry, Crunch could command a valuation equivalent to more than 15 times its trailing 12-month earnings before interest, taxes, depreciation and amortization of around $100 million, the sources said.
Private equity firms have traditionally been prolific investors in the fitness and wellness industry, as they are attracted to the predictable cash flows of subscription memberships and the opportunity to franchise locations.
In September, consumer-focused buyout firm L Catterton reached a deal to acquire pilates chain Solidcore for between $600 million and $700 million, Reuters reported. In October, investment firm 26North Partners, backed by Josh Harris, agreed to buy Onelife Fitness.
Founded in 1989, Crunch Fitness began with a basement gym in New York’s Greenwich Village. The gym chain, which currently has around 2.5 million members worldwide, operates and franchises more than 460 gyms in the United States, Australia, Canada, Costa Rica, Portugal, Puerto Rico and Spain.
In 2009, fitness industry veterans Mark Mastrov and Jim Rowley, who ran rival gym chain 24 Hour Fitness, teamed with Angelo Gordon’s private equity arm to buy Crunch Fitness out of bankruptcy.
Crunch Fitness competes with other gym chains such as Planet Fitness (NYSE:), which listed its shares through an initial public offering in 2015, and privately held 24 Hour Fitness.
TPG Growth, which acquired Crunch for an undisclosed amount in 2019, has invested in numerous companies across multiple sectors, including life sciences company Precision Medicine, cybersecurity company Tanium, and ride-hailing app operator Uber (NYSE 🙂).