HALO Talks Fast Break: EOS Fitness-The Journey to a Billion Dollar Deal and What Made It Possible

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This is Pete Moore, Halo Talks Fast Break, coming

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to you with recent news on the EOS transaction,

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which was sold from BRS Capital Partners over

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to our friends at TSG Consumer. The deal will close in a couple

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months after it goes through regulatory approval as well as

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lease assignments. Congratulations to the entire team there. Our good

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friend, Bob Giordina, Bruce Bruckman, Rashad, Rich

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Stredberg, and all the crew at EOS for the success they've had. Let me give

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you a little history lesson on what happened to go from 17 clubs

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to the map that was on the screen just before. Okay? They've gone up to

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a 75 locations in a tenure of ten

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years. Okay? 10 times the amount of locations. Now the

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interesting part of this transaction, it was owned by Gold's Gym operator, good

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friend of ours, beloved Brad and Wanda Nesty.

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They did a great job of creating the HVLP two point o of the

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Southwest, and we helped them sell the company. And the group that

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prevailed was Brockman Rosser and Sheryl with

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equity also from a group called Performance Equity, which one of their

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largest equity limited partners. That deal was done

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in February. We had to break the Gold's

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Gym termination of the franchise agreements, which cost several million

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dollars. Because when you buy a chain of clubs and you don't

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wanna pay franchise fees, you have to go and basically pay upfront

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for all the franchise fees on revenue that would be due as well as

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a 50% of what the ad fund

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would be calculated to to be. So January, the

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clubs are called Eos, which was a name that Brockman Rosser, and Cheryl

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Bruce Brockman came up with, which in Latin is the dawn or the

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rise. And the gold's rib signs came down once they got a wire

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to get their fees, which is basically ransom for

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taking down their brand. Our partner on this deal, Dave

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Zalkowitz, did a lot of work. Chris Jacob did a lot of work, and our

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beloved retired partner, Richard Pyle, who is currently in

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retirement. And I hereby wanna say to his his family and

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his wife that we've tried to officially take him out of retirement and bring him

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back to Integrity Square. Now the deal was rebranded to

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Eos. They were in California, Arizona, and Nevada. The way

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to prove out a business in order to get equity value is to get into

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other states and prove that your prototype, your box, your

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unit economics actually work in different cities, in

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different household incomes, and move into areas

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where you know that your prototype is going to be successful. As

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they continue to grow and brought on Rich Dreinberg, good friend of ours at

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Square, who used to be at Gold's Gym LA, one of the top guys

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in the industry, took the helm of Eos, and they started moving

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into Texas. They started moving into Florida. They started to align with

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Bob Giordino, who used to be the CEO and COO

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of New York Sports Clubs, which subsequently prior

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was also a BRS portfolio company for many, many

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years on its successful run over several recapitalizations of

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the company. Now as a company grows and as they

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prove out their business model and their average unit volumes and their

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profitability, who comes knocking at the door? Real estate developers.

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Because they know that these guys have a box that's proven, has

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KPIs that work, and you know what else they're gonna do? They're most likely gonna

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pay their rent, and they're gonna pay it on time. So real estate

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groups line up to say, hey. I'll build an EOS for you. Okay? You put

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in the equipment. I'll build it out for you, but give me a ten or

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eleven or fifteen year lease so I can at least monetize what

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that investment is for me. So EOS started to grow,

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not off their own balance sheet, but basically off the balance sheets of real estate

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developers. And that is the key to success in the health club or any bricks

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and mortar when someone else wants to fund your build out. Obviously, they probably

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took out debt. I know they had Golb Capital in there. And then

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my good friend, Brian Smith, at Northpoint, between Piper Sandler

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and Northpoint, was able to sell the company to our good friends at TSG

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Consumer. And the thesis was, hey. Let's take this company and go for

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one seventy five. They published two two fifty. I think they're gonna go to three

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fifty in the next three to five years. And Eos is most likely a candidate

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to be an IPO business and a publicly traded company in

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our h a l o, halo health active

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lifestyle and outdoors segment. So congratulations to the

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team. The story behind the story that people need to know is that

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the reason why you get a high valuation and you get someone to pay a

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billion 5 for your business when you have over a hundred million dollars of

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EBITDA is because you have proven that you could grow. You

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have proven that you can execute. You have proven that you have the team and

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infrastructure and vision to continue to innovate as

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well as backfill. Keep your boxes fresh, keep them

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clean, and get eight to 15,000 members per club. I don't know the exact

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numbers, but I know that they're very strong. As people move into

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the Sun Belt, continue to do that, Eos is gonna be a beneficiary

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of that. And when Eos comes to town, watch out

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because they've got a killer business model. It's a killer experience. It's

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a strong brand, and they are one of the bellwethers in our

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industry, and I hope they will be for the next several years. So congrats to

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the entire team. Congrats to the buyer and seller when this closes in a couple

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months. Shout out to Bruce, to Bob, to Rich, and to

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Richard Pyle. We expect back in the office shortly and return to the

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office and return to work. Good to see you. I hope this fast break

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helped understand why you build a business that's valuable, grow it

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by 10 x, and get paid for the value that you've created. Have a good

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weekend. PDMO over and out. Checking in from San Diego,

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Fit Social, and we'll catch up with you next week when we do a tour

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of what the Fit Social guys are doing with expanding their business

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from a health club to a social to a lifestyle brand that

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is getting a lot of press in San Diego. Over and out.

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PDML. Bam.