AN INDUSTRY VIEW
INDUSTRY COMMENT
THE EXPANSION OF WELLCARE A RECAP ON M&A AND INVESTMENT ACTIVITY It’s no secret that consumers are prioritising their health and wellbeing, constantly searching for products or services that will better them physically and/or mentally. That ambition is what’s driving the global wellness market – and as a result, the industry continues to pique the interest of private equity. As inflation and interest rates play havoc with consumers’ deployment of their disposable income, slower deal volume and nervousness in the market have followed. Fitness remains an area of intrigue for investors, both in terms of scope for growth and personal interest, yet I’m often asked questions such as: ‘What brand should we invest in? What concept is scalable? What’s coming next?’ There is, it seems, a lack of conviction faced with an ever-changing societal and economic environment. Despite that, we’ve seen some positivity. In the UK, United Fitness Brands added Triyoga to its supergroup of boutiques, and this growing consolidation trend has made its way to mainland Europe, too, with a series of similar transactions completing within the last year in Germany, Belgium and Poland. While smaller transactions were fewer and further between, TSG Consumer exited from Sunshine Fitness to Planet Fitness, and Sentinel Capital Partners acquired Bandon Holdings, the largest franchisee of the Anytime Fitness network in the USA. Cycling was prominent at the growth capital level, with Piper’s investment into Wattbike and Active Partners leading a funding round for Classified Cycling, the wireless bicycle transmission system manufacturer. And perhaps unsurprisingly, tech reigned in 22/23, with notable investments into Myzone (BGF), iFIT (L Catterton) and Therabody (North Castle Partners). For the upcoming year – as fitness and wellbeing continues to bounce back and grow with the support of the investment community – my bets are on: ■ The expansion of ‘wellcare’. The convergence of healthcare and wellness is rife. With endless advances in the capabilities of wearables, entrepreneurial brands are strides ahead of fairly outdated regulation (with the caveat that legislation is catching up, so companies operating within the increasingly blurred lines of medicine and wellness should keep active conversations with their advisers to pre-empt changes, particularly if preparing for investment). ■ The rise of the athlete venture capitalist. This trend erupted in 21/22 and doesn’t appear to be slowing: athletes are looking for ways to invest their earnings while supporting the industry, and are investing in young businesses they align with while other investors keep their powder dry. We’re seeing hybrid endorsement and equity arrangements, creating powerful partnerships through innovative contractual modelling. ■ Focus on scalable but sustainable products and concepts. Think personalisation (particularly within the VMS market), fitness racing/competitions (e.g. HYROX) and team training/activities/experiences; and profitability. Expect a continuation of the move towards profit and away from revenue in relation to financial diligence by investors in high-growth brands.
In terms of insights for the upcoming year, my bets are on the expansion of ‘Wellcare’. The
convergence of healthcare and wellness is rife.
SAMANTHA TRELEAVEN Corporate Lawyer, Pinsent Masons
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STATE OF THE UK FITNESS INDUSTRY REPORT 2023
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