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Wed Aug 1, 2012, 05:05 PM

24 Hour Fitness Is Said to Be on the Block, has hired Goldman Sachs to run the auction process

24 Hour Fitness Is Said to Be on the Block

http://dealbook.nytimes.com/2012/07/31/24-hour-fitness-health-club-chain-is-said-to-be-on-the-block/

The health club chain 24 Hour Fitness is for sale, people briefed on the matter said on Tuesday.

Forstmann Little, the private equity firm that owns 24 Hour Fitness, has hired Goldman Sachs to run the auction process, these people said. Goldman will soon begin soliciting interest from potential buyers, a group that includes other fitness chains and private equity firms.

The chain is expected to fetch about $2 billion in a sale, said these people, who requested anonymity because they were not authorized to discuss the deal publicly.

With about 425 locations, 24 Hour Fitness is the nationís largest privately owned chain of fitness centers. A representative of the company did not immediately respond to a request for comment.

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Reply 24 Hour Fitness Is Said to Be on the Block, has hired Goldman Sachs to run the auction process (Original post)
Amerigo Vespucci Aug 2012 OP
calimary Aug 2012 #1
Amerigo Vespucci Aug 2012 #2
Dokkie Aug 2012 #3

Response to Amerigo Vespucci (Original post)

Wed Aug 1, 2012, 05:59 PM

1. Uh-oh - my son will not be happy to hear this.

He LOVES the 24 Hour Fitness place near us.

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Response to calimary (Reply #1)

Wed Aug 1, 2012, 06:29 PM

2. I see one of three things happening

1). Whoever buys it keeps it the same

2). Whoever buys it does a "Bain Capital," guts it, fires everybody, rehires at a lower wage, relaunches at a higher cost to members to immediately reap a huge profit for shareholders

3). Some other bad thing I didn't cover in point #2

I don't have a lot of faith in #1 and I didn't include "make it better without raising rates" because...well, Mitt Romney, you know?

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Response to Amerigo Vespucci (Reply #2)

Wed Aug 1, 2012, 06:39 PM

3. How exactly do you make money from #2

 

Do you think the seller will undersell his company by such a huge amount that selling it for parts will be more profitable? I am sure you think that current customers will stick around if they raised the monthly fees? I am paying $25/ month at 24 hrs fitness and apart from the low monthly fees, I love the employees that work there. They are very helpful whenever you need assistance and the free workout session are a big plus. Now have a sudden change to make money and whatever brand loyalty the company has is gone, whatever profit the company is making is gone with it, now you whole investment is tied up on commercial real estate and used workout equipment.

I have no idea where people come up with such ridiculous ideas but that's not how thing work in the real world. I see scenario 2 as having a 0.001% chance of happening

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