2015 continues to evidence significant activity in the M&A market for health and fitness companies of all shapes and sizes. In March 2015, two publicly-announced transactions serve as perfect examples of this trend:
On March 5, 2015, Fitbit announced its acquisition (final terms not disclosed) of FitStar, a company that specializes in creating fitness-based apps on mobile devices. FitStar was started less than four years ago, and is the latest in an increasingly long line of start-ups acquired for strategic value in the mobile space by larger companies.
On March 16, 2014, Life Time Fitness announced that it would be acquired in a going private acquisition by private equity firms TPG and Leonard Green & Partners. The acquisition price was announced at $2.8 billion. This is not the first health and fitness investment for Leonard Green & Partners, who also has an ownership stake in Equinox, Pure and Sports Authority, among several other known retail brands.
As the general stock market continues to outperform, companies will continue to look for opportunities to deploy cash and buy companies that can fuel growth for the investor. The past several months of positive market news has increased the appetite of mid-market and larger companies for acquiring small companies.
Some of these smaller acquisitions ($1 million to $20 million) are driven by a desire of the acquirer to enter into a new market or industry (example: a fitness retail company acquiring a company that makes apps so it can expand its online/app offerings), while others desire to acquire certain key personnel and/or customer lists of the target company.
Horwood Marcus & Berk continues to represent several founders of companies as they sell some or all of their company to strategic acquirers. If you are a founder of a health or fitness-related company and want to know more about your exit options, please contact us.