Club Industry February 2022: 2022 Trends In Investment In The Fitness Industry

As we start off 2022, Integrity Square is patiently awaiting the full recovery of the bricks-and-mortar players nationwide. We’ve seen the polar opposite of recovery trends, which have been based on geography (and psychological mind tricks): As of mid-January when I write this, blue states are still at 40 percent to 75 percent recovery levels versus red states at 90 percent to 110 percent recovery based on COVID response tactics by local politicians and policies. By May 2022, we expect that all clubs and studios that have survived the past two years will return to pre-COVID membership and revenue levels along with the welcomed return of personal trainers and their clients and revenue.

The reason for the limited number of middle market, brick-and-mortar merger and acquisition activity (and private equity investments) over the past year has been the purchase price gap between the bid/ask spread valuation expectations. Interested sellers have looked to achieve valuations on pre-COVID EBITDA metrics while buyers and investors are still looking for that valuation discount. It has been a “show me, don’t project results for me” type of financial mentality, which will result in a strong pipeline of new sale processes commencing in second quarter 2022, we suspect.

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