Portfolio company Atlantic Street Capital Management LLC and Planet Fitness Inc. (PLNT) franchisee PLNTF Holdings are in the market for a new investor, according to two sources familiar with the matter.
Like many other private-equity-backed fitness chains, PLNTF tried to sell itself prior to the pandemic in March 2020, according to one of the sources. The company had a deal with a private equity fund that got pulled due to Covid shutdowns, the source added.
Founded in 2010, Indianapolis-based PLNTF likely has about $50 million to $60 million in Ebitda, one of the sources said.
Though it’s unclear who is running the process for PLNTF, Jefferies LLC and North Point, both of which have done a number of fitness deals, are likely candidates to have won the mandate. The banks did not respond to requests for comment.
The Planet Fitness Appeal
Planet Fitness franchisees were at the center of an M&A frenzy prior to the pandemic. Seeing the attraction of recurring revenue, Ebitda margins between 20% and 30%, a fragmented market, and growing consumer awareness around health and wellness, private equity poured money into high-value, low-price fitness chains, which bundle additional services for low-cost gym memberships.
For instance, in 2017 Atlantic Street invested an undisclosed amount in PLNTF, then known as Planet Fit Indy 10 LLC. The firm invested through its $210.5 million third fund, which typically targets companies with $3 million to $15 million in Ebitda, according to FactSet Research Systems Inc.
PLNTF Holdings now has over 80 locations, according to LinkedIn. In 2018, the company added 14 Planet Fitness clubs in Alabama and Virginia, boosting its footprint to 29 locations at the time, according to a press release.
Many companies, including PLNTF, were planning exits around the time Covid hit the United States in 2020, but paused plans due to the uncertainty over gym shutdowns. Two years later, that dealmaking is yet to recover, though franchisees are gearing up for sales.
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