Before Stephen Kindler and his family brought on a PE partner to support their business, National Fitness Partners, a Planet Fitness franchise group, it was doing well.
“The business was growing,” Kindler, the company’s president and CEO says. “We had access to capital through some local bank relationships over the course of multiple decades of operating in the Greater Harrisburg market and we were able to produce some really good results with our first couple Planet Fitness locations, moreso than we ever thought was possible inside the traditional fitness industry.”
The company had a good foundation, so the family owners looked to branch out beyond their backyard. They started building a club a year for about five years. Then some of the family owners — his dad, uncle and other partners — began looking to transition into retirement around 2014.
“That spurred the transaction discussions internally with us and then we partnered with a brokerage firm based in Virginia that helped lead our process,” he says.
Kindler says he and his family connect with the folks at Argonne Capital Group, in part because the group specializes in taking smaller family-run franchise operations and building them out into more professionally run, scalable organizations, as well as the firm’s traditionally longer hold period.
“They don’t have a definitive hold horizon,” he says. “It can be fluid. And that was one thing for us — we didn’t want to get into a situation where we were doing a bunch of work and then three years later getting cycled out into another situation. This was, for us, a great opportunity to set a good foundation and a new path forward and we’ve been able to do exactly that and then some over the course of the last five years.”
The transition from being the last word on the business they created to having PE backers who would also have a say in business matters went smoothy, Kindler says. One of the more significant adjustments for the business was the real estate selection process.
“They are hyper focused on real estate selection,” he says. “They’re very good at it. It changed the way in which we look at it.”
Historically, he says, the family would get together and look at a site. If everyone liked it and agreed, they trusted their gut. Argonne introduced a very specific methodology of analyzing and underwriting locations. It was a methodical process that has been one of the game changers for the company.
“Before the pandemic we were building a club a month,” he says. “Historically, we were building one a year. Without that foundation we wouldn’t have been able to accomplish those types of things.”
Kindler spoke on the Smart Business Dealmakers Podcast about the history and progression of the family business, choosing a PE partner and his and its adaptation to life with a PE boss, and how dealmaking during the pandemic compares to pre-COVID transactions. Hit play below to hear the full conversation.
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