Selling a fitness club and capturing its full value is a complex process that involves planning, preparation, research and a big investment of time. My firm, Sports Club Advisors, helps clients buy and sell fitness clubs and sports related businesses across the U.S. Here is the process we use.
The first step is to have your fitness club or gym valued by someone who is knowledgeable about the fitness industry and understands the market for fitness clubs. We offer a free valuation and market assessment to help club owners understand their options.
The next step is to prepare a marketing plan for your club which includes a comprehensive list of potential buyers and how you intend to contact them. Depending on the type and size of your fitness club, the list might including local individuals and competitors, or national strategic buyers and financial buyers like private equity groups if you own a large, multi-location fitness club. Your marketing plan should also include online M&A platforms to reach buyers that are not on your direct contact list.
The third step is to prepare a formal offering package that describes your business including its history, current operations, financial performance and prospects. This offering package is essential because you only get one chance to make a first impression. If the package is purely prepared or is missing key information, it reflects poorly on your business and could result in a lower valuation, or in a worst case, buyers not being interested at all.
The fourth step is to implement the marketing plan. This means sending letters and emails to all of the buyers on your direct contact list and then following up with a phone call or two to each one to see if they are interested. This takes a lot of time and energy so make sure you are ready for it.
Once we have buyers who are interested, we ask them to sign a nondisclosure agreement and provide them with the offering package. If they like what they see we set up a meeting with the seller and a tour of the club. If there is continued interest we work with both parties to negotiate a Letter of Intent or term sheet, then work with the lawyers to prepare the legal documents, and then close the deal.
When we work with a client, the entire process takes 6-9 months from start to finish. It may take you longer if you try to do it yourself. Keep in mind that many buyers will want you to continue to work with the them for another 6-9 months to ensure a smooth and orderly transition, so plan on begin fully retired 12-18 months after you start the process.
I hope that helps. If you like more information you can visit our website at http://sportsclubadvisors.net which has a lot of resources about selling a fitness club. I’d also be happy to answer any questions. My number is (224) 513-5142.