Getting in shape
Europe’s largest fitness club operator, Basic Fit, is looking for rapid expansion after securing financing for a buy-out by management and leading global private equity firm 3i. The business, which operates 272 clubs across the Benelux, France and Spain, will add some 50 new clubs each year over the next four years through an ambitious growth strategy.
Basic Fit’s growth ambitions were developed in close collaboration with co-owners 3i. The buy-out firm, focused on mid-market opportunities, was one of several that expressed an interest in acquiring a controlling stake. Alongside other lenders, ING lead the financing for the carve out of HealthCity and the acquisition of the Basic Fit chain in December 2013.
“We talked to seven private equity players in total, but what we liked about 3i was their strong local team in the Netherlands, which has good local knowledge and gave a higher level of comfort.” says Moos. “We could tell they had invested a lot of time and resources getting up to speed on us, even before we were in exclusive talks. This meant that they were able to be very clear about they wanted, and had good overviews. That gave us confidence.”
“We talked to seven private equity players in total, but what we liked about 3i was their strong local team in the Netherlands, which has good local knowledge and gave a higher level of comfort.” - Rene Moos, CEO/owner Basic Fit
Moos says the experience of working with them has been positive. He attributes this to having clearly defined operational and governance issues in advance of the deal.
“You really have to address what their aims are and the way you will work with them in as much detail as possible before the transaction, and not afterwards,” he explains. “Make sure you understand their expectations in terms of numbers and the areas in which you will require their approvals on business decisions.”
Basic Fit has already shaken up the budget gym market in the Netherlands and Belgium with 24/7 opening times and low cost memberships that are fully transferable among members of the same household.
“We were looking to add something distinctive in our offering, when the idea of 24/7 gym opening hours came up,” explains Rene Moos, Basic Fit CEO and owner. “It was a surprise for us to see how popular it became. We began to have a steady stream of members coming in at 2:00 am and 3:00 am to exercise. A lot of them are staff from late night bars and restaurants who struggle to fit their workouts into regular opening hours. Now they don’t even have to think about what time it is – they just go whenever they want to.”
The European fitness club market is a relatively young industry featuring many small and family-run businesses, says Moos. As such, it continues to have opportunities for professionalisation and consolidation.
Prior to the buy-out, management also operated the high-end HealthCity brand, which was subsequently carved out under a new management structure. Today it operates as an entirely separate company.
“The luxury club market is extremely tough, and you have to be really special to survive in that market,” says Moos. “When we ran both sides of the business, the high-end and the budget level, our focus was on everything and nothing. Now, after the split, each business has the right focus in terms of sales, marketing, learning and expansion. With Basic Fit, we have created a brand that is very well positioned as an option for those who use gyms mainly for the strength and cardio machines.”
This sharp market focus and a tailored offering is also a feature of Basic Fit’s international expansion, which seeks to adjust to the culture and habits of each country.
“It isn’t possible to replicate a business in every country. We have learned from experience that clubs in each country must be able to cater to local market requirements in terms of their services and our marketing. We have local managers who know their markets well and are responsible for doing this,” says Moos.