Selling a business is a personal decision that requires time, patience, and careful planning to do correctly. It is a complex process that typically takes 6 months to a year or more to complete. Successful sellers set clear personal, business, and financial goals before putting their business on the market. Once a sale is finalized, the business is gone forever, so sellers must carefully consider the impact on their family, employees, and themselves. The process involves setting objectives, evaluating strengths and weaknesses, getting an appraisal, developing buyer criteria, identifying potential buyers, creating a business profile, negotiating cautiously, and planning a smooth transition. Maintaining momentum in negotiations is important to keep a potential deal moving forward.

1. Exit Stage Right….Revisited
At some point in the life of a business, every owner wrestles with the possibility of selling his or
her company. Given the current climate of the fitness industry- rapid bifurification, mergers,
joint ventures, new challenging brands and concepts- many entrepreneurs are reaching that
point today. But do you want to sell?
Selling a business is a very personal decision. It takes time and patience to do it correctly. The
procedure is tedious, and unlike the many exercises we encounter in our daily lives, the process
is rarely repetitive. The problems you will face during the sale of your business are ones you
have not encountered before. Bear in mind: Once the transaction is complete, your business is
gone forever.
The most successful sellers set their personal, business and financial goals long before they
place their business on the market. They know what they want to achieve by selling their
business. Whether they want money and time to travel, retirement, or leverage to start a new
venture, they have a plan to get there.
The sale of your business will have a great impact on your family, employees and most of all
you. Take the time to think of all the implications before needlessly disrupting the business and
your life. Examine your motives and take a hard look at your reasons for selling.
The following outline will not make the sale of your business any easier, but it will let you know
where you stand in the process. You should realistically anticipate a minimum of six months and
a year or more is not uncommon.
1. Set Objectives- What is your motivation for selling? Retirement? Relocation? Be clear on
your objectives and discuss with your CPA to understand the implications of the
different deal structures. To begin negotiations before evaluating your objectives is a
deal-breaker.
2. Identify Strengths and Weaknesses- Everything will come out so be upfront about
problems, if not it will cost you money later. What is the clubs unique position in the
market? Parking, signage, exclusive programming. Reevaluate all base operating
expenses and vendor relationships make sure you are getting the best deals. Every
dollar you save now is worth three to five times that when you sell. Have you reviewed
your club on the web? Yelp, Yahoo? Your buyer will and surely come to their own
conclusions, quickly. This is a pivotal step in the process your goodwill will get you a
higher return than you can imagine. Maintain an easy to navigate, informative website
with links to Facebook and content worth sharing. If you own a franchised club review

2. your agreement and discuss with your franchisor. Get documentation and clarification
regarding the transfer of the business, fees, application etc.
3. Get an Appraisal- Do you know your clubs value? Probably not. That’s because there are so
many ways to value a club- Price/earnings multiples, 1x gross/3-6 times EBITDA, discounted
cash flow, to name a few. Hire a consultant in the fitness industry to give you current
guidelines. You must be able to justify your price. You need to be comfortable with the deal
and the buyer will need to justify price to their lender. Which if not the bank is often you. It
is not uncommon for the seller to hold a note on the business.
4. Develop Buyer Criteria- Look for buyers that are shopping for what your selling. Are you
interested in staying on in management, or sailing off into the sunset? Different types of
buyers will have different requirements from you.
5. Identify Potential Buyers- There are Strategic, Financial and Emotional buyers. They all
value different things about the business and put values on things that the other does
not. We have seen a business sell for more than it was listed for, because the
competitor had a lease that was expiring and a Landlord that wasn’t going to renew it.
While your competitors may be the most likely acquirers, they certainly aren’t the ones
you want to open your books to. Have your broker place generic ads and screen buyers
very carefully. If you have the right representation and your business is valued correctly,
the transaction will happen swiftly without disruption of business or rumors that your
going out of business which hurts employee morale and could impact sales of
memberships and personal training.
6. Develop a Profile- This is one of the best opportunities to showcase the business.
Technology is in your corner on this one. A video tour can keep tire kickers out of the
facility while giving experienced business buyers a taste of what’s available. Start with
an aerial view with Google maps and then a full walk through. I also recommend a full
inspection report of all the systems, HVAC, Electrical, Plumbing and anything else
specific to your location. Have a local service tech provide a condition report of the
equipment noting manufacturer, model, age, warranty status. If you have audited
financials that’s a big plus. If not three years of tax returns, three months of bank
statements and an interim statement is bare minimum for financials. Emphasize your
uniqueness, your operational and training systems, the marketing and advertising
programs. A good broker is a big advantage now sharing only what’s necessary while not
being adversarial or revealing the name of the seller.
7. Negotiate Cautiously- Remember: You can make a buyer sign a confidentiality
agreement, but they are not going to forget what they see. Stay focused and don’t get
emotional, they are going to call your baby ugly remember the goal. At this point on it’s
all subjective. The price you’ll get is not necessarily what you deserve, but will definitely
be what you negotiate. This is hardball folks. If you don’t have the stomach for it, bring

3. in a qualified pinch-hitter, not your brother-in-law the car dealer or worse, your lawyer.
By all means consult with your accountant and lawyer on risks and liabilities, but don’t
let them negotiate for you. An antagonistic lawyer can be a major deal-breaker.
8. Plan Transactions- Planning for a smooth transfer of power will make everyone’s life
easier. Share knowledge, train key people and have the accountant and lawyer exercise
due diligence. Then take a deep breath, sign the papers- and go out and celebrate.
The key is to keep a deal moving forward if it’s not moving it’s dying.