Gym / Fitness Center
This analysis follows the BAM Analysis Framework, evaluating Earnings Quality, Capital Structure Sustainability, Operational Risk Exposure, and Upside Potential.
Deal Snapshot
Industry: Membership-Based Fitness Center
Revenue: $1,850,000
Seller’s Discretionary Earnings (SDE): $420,000
Asking Price: $1,200,000
Multiple: 2.86x SDE
Valuation Analysis
At 2.86x SDE, valuation appears within standard acquisition ranges.
However, gym revenue durability depends heavily on membership retention and churn management.
Recurring revenue must be evaluated beyond headline monthly subscription numbers.
SBA Loan Scenario
Purchase Price: $1,200,000
Buyer Equity (10%): $120,000
Loan Amount: $1,080,000
Estimated Annual Debt Service: ~$172,000
Debt Service Coverage Ratio (DSCR)
DSCR = $420,000 ÷ $172,000 ≈ 2.44x
Coverage appears adequate under stable membership conditions.
However, revenue contraction due to membership attrition can quickly compress margins.
Operational Risk Factors
• Membership churn sensitivity
• Fixed lease obligations
• Equipment depreciation and replacement
• Competitive local market pressure
• Dependence on marketing acquisition channels
Upside Potential
• Corporate membership programs
• Personal training expansion
• Pricing optimization
• Member retention initiatives
Downside Stress Scenario (20% Membership Decline)
Adjusted SDE ≈ $300,000
Revised DSCR:
$300,000 ÷ $172,000 ≈ 1.74x
Margin of safety narrows significantly under churn pressure.
Capital Structure Assessment
Capital structure is sustainable under stable membership levels but sensitive to attrition volatility.
BAM Risk Profile
Earnings Stability: Moderate
Capital Structure Strength: Moderate
Operational Exposure: Elevated
Revenue Volatility Sensitivity: Elevated
Overall Risk Tier: Elevated
Investment Thesis
Strong baseline cash flow with recurring structure, but retention management is critical to sustainability.
Strengthen Your Acquisition Foundation
New to structured acquisition analysis? Begin with the core lessons inside the Acquisition Academy.
Explore More Structured Deal Breakdowns
Review additional industry analyses categorized by risk tier inside the Deal Marketplace.