Without a doubt running a gym can be a tough job, due to the long working hours and heavy emotional investment in your business. It’s understandable that at some point, many owners might start to consider a business sale. However, it can be difficult to put a number on all the time and effort that you have put into your business.
Gyms are being bought and sold every day. The process can be long and can take a lot of organisation and time on the seller’s side. We have put together this useful guide on how to prepare your gym for sale and all the steps you will likely go through.
How to Know When to Sell Your Gym
This is a very personal decision for each and every seller, but many gym owners will be looking to sell as they are ready for new challenges and opportunities, whether that be retirement or a business venture. Of course, running a gym can be tiring due to the long hours, so many owners might be on the search for a more relaxed working lifestyle.
If you’re considering selling your gym business, then it might well be worth contacting Intelligent on 0800 612 7718 or email@example.com, as our expert and dedicated team can advise you on the process and help you decide whether a business sale would be the best move.
Preparing Your Gym for Sale
Allow Plenty of Time
No matter what type of business you are selling, it is essential that a seller allows plenty of lead time, as there is a huge checklist of things to sort out. Taking time to do this, means all accounts should be in order and gives the seller the best opportunity to find the right buyer for their business.
Touching up on any maintenance issues can be a fantastic way to increase the value of your business and attract buyers.
However, it’s worth noting that many buyers will want to redo the gym to their own tastes once they have bought the business, so don’t complete a full refurbishment of the premises.
Sort Out Your Accounts
A very important aspect of preparing your business for sale is making sure to sort out your accounts so that you will be able to back up your financial claims. Ensuring that all accounts, licenses, insurance, and paperwork are up to date will help the process run smoothly and is a great way to impress potential buyers with your organised and professional approach.
Know Your Numbers
A good set of accurate records will make it a lot easier for any potential buyers to really consider the business. It’s a great idea to focus on knowing your numbers and offering solid accounting. Proper accounting and organised books will attract the best buyers and will positively influence your gym’s worth.
Whether you manage the company’s accounts yourself or have an accountant, the successful sale of your gym business is dependent on good bookkeeping. Potential buyers will be interested in this, as they will be able to get a view of the cash flow, payroll, profit, sales, and all financial activities of your business.
For more information on how to prepare your business for sale, check out our previous article here.
Find Out How Much Your Gym Is Worth - Business Valuation
Determine Your Gym’s Value
This one of the most crucial stages in any business sale. It’s important that owners are realistic about the value of their business. This can often be very difficult for many vendors, as they might have a certain figure in mind. If you’re looking to increase the value of your business before the sale, it might be worth looking at the guide we have put together on this topic.
Usually, a business’s value is calculated based on a multiple of the cash flow that the company generates. The cash flow usually means earnings before interest, taxes, depreciation, and EBITDA. Of course, the sale price will also include equipment, fixtures, assets, loans and commitments, and future revenue predictions.
To ensure every angle is covered, it is essential to work with an objective party to get an accurate valuation. At Intelligent, we offer free, instant valuations, that will take you less than 60 seconds to complete. Our highly-skilled, expert team will then take things from there and will help you evaluate every part of the business. For more detailed information on how to value your business, please check out our previous guide.
Adjusted Net Profit
This calculation takes into consideration any exceptional costs that the business has incurred. These exceptional costs are not considered part of the normal course of business and should therefore be excluded
We analyse buyer behaviour and transactions regionally and nationally. We overlay our experience, sector knowledge and understanding of market trends to provide a real time market multiple
Assets & Liabilities
An asset is something that the business owns and is a key factor in determining the businesses value. These include such things as property, stock and equipment. A liability is the opposite of an asset and includes things such as loans, tax and mortgages
What’s Your Brand Worth?
The next thing to think about is the value of your brand. It’s worth considering if your affiliate name or website could be worth something. If you’re selling a branded asset, it is most likely that this will be worth nothing, as you are not the license holder. You can’t sell the domain name of the website, as technically it is not your intellectual property. You also don’t own the business name, marketing material, or signage.
However, on the other hand, if you own your own brand which has a good name and reputation, then this could add to the value of the business. You will need to think about all the different ways in which your brand will save the buyer money. The more money you will be saving the buyer, then the more your brand is worth.
Due Diligence Required When Selling Your Gym
The due diligence process is the time when the buyer will need to fully understand what exactly they are buying.
This part of the process is all about the numbers. You will need to provide documents that prove your earnings and potential future earnings. Profit and loss documents also need to be clear and available for the buyer. There needs to be substantial data to back up any predictions you have made.
The buyer will be digging into the data you have provided and will be looking for any mistakes. Make sure to try and find any errors before the buyer does.
Sellers may often opt to work with legal advisors during this process, as they can help with presenting information in the best way possible. Of course, it is essential to disclose everything to potential buyers, but legal advisors can help if any questions are raised.
If you can, it might be a great idea to release any confidential commercial information later in the sale, once the buyer is committed. Without a doubt, full disclosure is necessary, but solicitors can be great at negotiating these situations to the seller’s advantage.
Communicate in an effective, clear way with your buyer and consider what details of the business you want to highlight. This will help any potential buyers decide if the business is the right choice for them.
Most importantly, remember to be honest throughout the entire sales process. Once the trust is lost, it can be very hard to regain, with many sales falling through due to this. In a worst-case scenario, any falsities could lead to legal action.
If you’re looking for more information on how to navigate the complicated due diligence process, take a look at our Due Diligence Guide.
How to Negotiate the Sale of Your Gym
The first step of your business sale is finding a suitable and interested buyer. You need to have a think about your ideal buyer and then dedicate your marketing and advertising efforts to attracting them.
You might already have someone in mind who would like to buy your business. Potentially a key employee or manager who you’ve been working closely with, so that they can take over the business. However, this isn’t the case for everyone. It could be worth talking to the coaches and trainers at your gym, as they are passionate about fitness and might be looking for new business opportunities.
You could also consider approaching other gym owners in the area and asking if they would be interested in the opportunity. They may be looking to own multiple gyms, and this could be perfect timing for them.
If you’re concerned about your members finding out about the business sale, you could consider a confidential sale and ask potential buyers to sign a Non-Disclosure Agreement. However, we would not usually recommend this, as most confidential sales take a lot longer to sell and we know most vendors are looking to find their asking price as quickly as possible.
At Intelligent, we will produce a bespoke and professional business listing for you, which we will then advertise on a variety of our third-party trusted sites. All the stress will be taken away and our dedicated, expert team will manage the listing and all enquiries on your behalf.
Consider If You Need a Business Broker When Selling Your Gym
For gym owners, who are looking to move on to new opportunities or are on the search for a more relaxed working lifestyle, then it would be a great idea to seek out the help of a business broker. The sale of your gym business is likely to be long and complicated and a business broker can help this process run as smoothly as possible. At Intelligent, our dedicated expert team will take the time to get to know you, your business, and your goals. We will apply our experience and sector knowledge to best position and sell your business for the best possible price.
We know just how hard it can be to run a business. That hard work should be rewarding, and our skillful negotiators will work tirelessly to achieve the best possible price for your business, in a time frame to suit you and with as little distraction for you as possible.
We have a huge amount of successful previous experience in the sales of gyms. Just take a look at this case study from one our previous clients.
In summary, the process of selling your gym business is no mean feat. Attempting to make your gym as successful as possible before considering a sale, will of course ease the proceedings. However, there are many different reasons to sell your gym and if you’re ready for new opportunities, then it might be time to get in touch with Intelligent and begin the selling process.
And there you have it, that’s our guide on how to sell a gym business! We hope you have a learnt a lot and we look forward to hopefully helping you sell your business.
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