F45 Training Sold, To Become Publicly Traded Company

F45 Training, Los Angeles, is being acquired by Crescent Acquisition Corp. with a combination of stock and cash consideration, according to an announcement by Crescent Acquisition.

Crescent Acquisition is a publicly traded special purpose acquisition company. The combined company will trade on NASDAQ under the name F45 Training Holdings Inc.

The combined company is anticipated to have an enterprise value of $845 million and be capitalized by cash from Crescent Acquisition Corp’s trust totaling more than $250 million, assuming no public shareholders of Crescent Acquisition Corp. exercise their redemption rights, along with an incremental $50 million committed by Crescent Capital Group LP pursuant to a forward purchase agreement to acquire 5 million units of Crescent Acquisition Corp., according to the announcement.

Existing F45 shareholders are expected to be issued approximately 53.3 million shares in the combined company and paid up to $204 million in cash consideration, assuming no public shareholders of Crescent Acquisition Corp exercise their redemption rights.

Current F45 shareholders will hold approximately 60 percent of the combined company at closing, assuming no redemptions by the public shareholders of Crescent Acquisition Corp.

The deal is expected to be completed in the third quarter.

The F45 Training executive team of CEO Adam Gilchrist, Chief Financial Officer Chris Payne and Chief Operating Officer Heather Christie will continue to lead the company.

F45 operates a nearly 100 percent franchise model. In its seven years of operation, F45 has more than 1,993 franchises sold in 53 countries and 1,240 studios open in 40 countries as of March 31, 2020, according to a presentation on June 24 by the executive team of F45 Training and Crescent Acquisition Corp.

The company has 847 franchises sold in the United States and 377 studios that were open pre-COVID-19 with the potential for more than 7,000 locations, according to the company. Sixty-five percent of its units have reopened in the United States, as of June 19.

In Australia where the brand started, the company has 654 franchises sold, with 593 studios opened pre-COVID-19. Seventy-six percent of the studios in Australia were reopened as of June 19. It has the potential for more than 650 locations in the country.

F45 Training also has 492 franchises sold in the rest of the world with 270 studios that were open pre-COVID-19. Twenty-seven percent of units in the rest of the world were reopened as of June 19. The company estimates potential of more than 15,300 locations in the rest of the world.

F45 Training’s 2019 revenue was $93 million, which was a 60 percent revenue growth year over year, according to the presentation.

F45 Training started in Australia seven years ago but expanded to the United States, and in March 2019, Mark Wahlberg became a minority interest owner.

“F45’s mission is to improve people’s lives and well-being, and the company was founded to make unique, effective and high-quality training accessible to everyone, while empowering franchisees to run successful businesses,” said F45 CEO Adam Gilchrist. “As a public company, I am confident that we will be able to accelerate our mission, while creating value for our shareholders. We look forward to continuing to disrupt our industry and to inspire even more people to achieve their health and fitness goals through F45’s innovative workouts combined with our nutrition program.”

Crescent Acquisition Corp. Executive Chairman Robert Beyer and CEO Todd Purdy released this statement: “We are looking forward to deepening our relationship with Adam and the entire F45 team as they continue to build what is undoubtedly one of the most exciting growth stories in health and fitness. F45’s high profit margins, exceptional franchisee economics and repeatable business model position it for continued rapid expansion. We are confident that F45’s strong member loyalty and consistently innovative and differentiated workouts will continue to prevail in many new and existing markets around the world.”

The company’s board of directors will include the current members of the F45 board. Crescent Acquisition Corp’s sponsor will name two individuals to serve as directors. In 2019, Mark Wahlberg and FOD Capital LLC, a family office fund managed by Michael Raymond, led a private equity investment in F45 through MWIG LLC, a private investment vehicle. The MWIG group has been instrumental in accelerating F45’s growth and will retain its board representation after the close of this transaction.