Sold small gym
As the CF world matures people will begin to buy and sell gyms. Information about these transactions will be helpful to others.
I sold my gym CrossFit West Valley last week to 2 coach's and one of their wives. My reason for selling was to move about 45 miles away. After a long time single I met someone special. Her life was on the East side of town, mine on the West. After looking at all our options I decided to sell when the opportunity came up.
2,300 square foot, air conditioned, gym
Lease was about $1,800 a month
85 members @ about $105 average monthly revenue per member
We were closer to 95 members but a situation developed where I asked a very popular member to leave which cost me two coaches and many members. I knew this was going to happen but made the decisions I had to ask the person to leave regardless. Self respect is more important then money.
Deal was done as an asset purchase which cost both myself and the buyers extra money but it was the only way they would do it. So they bought all the assets of my gym and signed a new lease with the landlord. This was part of the deal. I had to be released from the lease when I sold the income producing assets.
The buyers were fully aware of my desire to sell and negotiated hard. I understand I wasn't in a strong position and don't blame them for negotiating hard. I always had the option to say no.
We used an escrow agent to make sure it was done right.
Official sale price was $42,500 with me paying the escrow fees. I netted about $41,500. It was an all cash deal and I left the escrow office with a check for the full amount.
I also got all the income for the month of March without having to pay Aprils rent out of it so that was another maybe $3,000.
I figured the liquidation value of the equipment was maybe $25,000.
I loosely used the owner benefit method to come up with a price. Basically how much could I have made the year before if I had chosen to run the gym to maximize my benefit (For example I choose to pay a salary coach so I could have a reasonable work schedule. If I was worried about taking home more I would only use part time coaches). I then applied a multiple of 1.25 to this number and came up with $55,000. The difference was a result of negotiations. In my financial life the $10,000 price difference was not worth risking my relationship or happiness so I agreed. I have other assets more valuable then the gym.
All parties involved were publicly supportive of each other to minimize disruption to the community.
I have a 1 year no compete in a 10 mile radius of the gym. This is a none issue because I moved 45 miles away.
I did lots of things right and wrong in the 3.5 years I built the gym. I'll go over some of those in a different post.
I have a couple of real estate transactions I need to do before I figure out what is next. Once these are handled there is a fair chance I will open another gym. It will most likely be another affiliate, better then the first.