Location: Arlington, TX
The attached spreadsheet model evaluates Anytime Fitness located in Arlington, TX currently listed for sale at $75,000. Within the spreadsheet, you will find a pro forma with our forecasted income statement, balance sheet, cost of capital and free cash flows statement based on our market research. The cells that are blue within the spreadsheet allow for variables to be changed allowing interested buyers to experiment with different scenarios.
According to our research, 15% of all Americans attend a local fitness center. The current population of Arlington, TX totals 373,698 people, which tells us that 56,055 of those people understand the importance of enrolling with a fitness center. We found 39 gyms in the Arlington area that would be our direct competition. If the 39 fitness centers shared the 15% of the population equally, each gym would hold 1,437 members. The average Anytime Fitness claims 747 members. We are confident there is room to capture more of the market share, but to be conservative, we felt it would be safe to assume Arlington would enroll at least 60% of the Anytime Fitness average of 295 members growing 2% each year.
With the above inputs and a 9.25% interest rate and a desired 12% required rate of return, we found a weighted cost of capital of 9.5% with an internal rate of return of 36% and a net present value of $80,001. For this reason, we believe that this gym is undervalued and an investor would be wise to make this purchase.