Crunch, New York, may be heading for a sale that could net more than $200 million, according to a report by The Wall Street Journal.
Crunch, which is owned by private equity firms New Evolution Ventures (NeV), Lafayette, CA, and Angelo, Gordon and Co., New York, has hired investment bank William Blair and Co. to "weigh strategic alternatives that include a sale," sources told The Wall Street Journal in Monday's report. A sale would not occur until early 2015, the newspaper reported.
A Crunch spokesperson declined comment to Club Industry about the story. A source confirmed the accuracy of The Wall Street Journal report to Club Industry.
Crunch is No. 11 on Club Industry's Top 100 Clubs list with a reported $131 million in 2013 revenue, a 16 percent increase from the previous year. Crunch CEO Keith Worts attributed the increase to 12 new majority-owned clubs that opened through acquisitions and greenfield opportunities in 2013. Crunch also opened 20 franchise clubs and more than doubled its franchise unit sales year over year, Worts told Club Industry earlier this year.
Crunch reported 69 clubs in 14 states at the end of 2013, with 370,000 memberships and 2,500 employees. Of those 69 clubs, 40 were franchises. Crunch told Club Industry it wanted to acquire 15 clubs in 2014.
Today, Crunch announced it is registered to sell franchises in Canada. In the announcement, Crunch said it has sold more than 300 units since Crunch began franchising clubs in 2010. One of those units is a new club in California that is expected to open in January.
The Wall Street Journal reported Crunch has around $20 million of earnings before interest, taxes, depreciation and amortization (EBITDA).
This would not be the first time Crunch has been sold since it was founded in New York City's East Village in 1989. Bally Total Fitness, Chicago, bought Crunch in 2001 for $90 million. In 2006, Bally sold Crunch to Angelo, Gordon for $45 million. Angelo, Gordon's partner at the time was Marc Tascher, founder of Town Sports International, New York, who later became president of Bally.
In May 2009, Crunch filed for bankruptcy and sought a sale to what was then known as New Evolution Fitness Company (NEFC), a firm founded by Mark Mastrov and Jim Rowley. Angelo, Gordon partnered with NEFC in purchasing Crunch out of bankruptcy in September 2009.
Angelo, Gordon and NEFC bought Crunch's first lien debt from Goldman Sachs Credit Partners for $46.2 million in December 2008. That allowed Angelo, Gordon to own both the equity and debt of Crunch.
It is not known how a sale of Crunch would impact NeV partner US Fitness, which recently acquired Sport & Health, McLean, VA. In addition to Sport & Health, US Fitness, led by Kirk and John Galiani, operates five Crunch clubs in the Washington, DC, area, as well as nine Onelife Fitness clubs.