HALO Talks Fast Break: EOS Fitness-The Journey to a Billion Dollar Deal and What Made It Possible

EōS Fitness is one of the bellwether brands in the HALO space, and for good reason! Listen now to today's HALO Talks Fast Break as Integrity Square Managing Partner & Founder, Pete Moore talks about the history of the brand, where it came from, what the name means, and how this all led up to a pending sale from BRS Capital Partners to TSG Consumer. 🎉

This is a huge testament to the power of a strong team, innovative business model, and a relentless drive for growth. 🏋️‍♂️✨

A few key takeaways:

• Scalable Business Models Attract Investment: EoS’s ability to prove their unit economics and success in multiple states made them highly attractive to investors and real estate partners, facilitating rapid expansion beyond their own balance sheet.

• Executing on Vision Creates Value: Achieving 10x growth and delivering consistent member experiences built a brand worthy of a $1.5bn+ valuation, supported by more than $100M in EBITDA.

• Strategic Partnerships Accelerate Growth: Collaborating with top industry leaders and real estate developers enabled EoS to scale efficiently and set the stage for potential IPO ambitions.
  
  Resources: 

• BRS Aquires EoS: https://brs.com/news/brs-and-performance-equity-management-announce-acquisition-of-eos-fitness/
  
  
• Sales of EoS to TSG: https://www.tsgconsumer.com/news/tsg-consumer-to-acquire-eos-fitness 

Episode Transcript

(00:06):
This is Pete Moore, Halo Talks Fast Break, coming
to you with recent news on the EOS transaction,
which was sold from BRS Capital Partners over
to our friends at TSG Consumer. The deal will close in a couple
months after it goes through regulatory approval as well as
lease assignments. Congratulations to the entire team there. Our good

(00:28):
friend, Bob Giordina, Bruce Bruckman, Rashad, Rich
Stredberg, and all the crew at EOS for the success they've had. Let me give
you a little history lesson on what happened to go from 17 clubs
to the map that was on the screen just before. Okay? They've gone up to
a 75 locations in a tenure of ten
years. Okay? 10 times the amount of locations. Now the

(00:50):
interesting part of this transaction, it was owned by Gold's Gym operator, good
friend of ours, beloved Brad and Wanda Nesty.
They did a great job of creating the HVLP two point o of the
Southwest, and we helped them sell the company. And the group that
prevailed was Brockman Rosser and Sheryl with
equity also from a group called Performance Equity, which one of their

(01:13):
largest equity limited partners. That deal was done
in February. We had to break the Gold's
Gym termination of the franchise agreements, which cost several million
dollars. Because when you buy a chain of clubs and you don't
wanna pay franchise fees, you have to go and basically pay upfront
for all the franchise fees on revenue that would be due as well as

(01:35):
a 50% of what the ad fund
would be calculated to to be. So January, the
clubs are called Eos, which was a name that Brockman Rosser, and Cheryl
Bruce Brockman came up with, which in Latin is the dawn or the
rise. And the gold's rib signs came down once they got a wire
to get their fees, which is basically ransom for

(01:58):
taking down their brand. Our partner on this deal, Dave
Zalkowitz, did a lot of work. Chris Jacob did a lot of work, and our
beloved retired partner, Richard Pyle, who is currently in
retirement. And I hereby wanna say to his his family and
his wife that we've tried to officially take him out of retirement and bring him
back to Integrity Square. Now the deal was rebranded to

(02:19):
Eos. They were in California, Arizona, and Nevada. The way
to prove out a business in order to get equity value is to get into
other states and prove that your prototype, your box, your
unit economics actually work in different cities, in
different household incomes, and move into areas
where you know that your prototype is going to be successful. As

(02:42):
they continue to grow and brought on Rich Dreinberg, good friend of ours at
Square, who used to be at Gold's Gym LA, one of the top guys
in the industry, took the helm of Eos, and they started moving
into Texas. They started moving into Florida. They started to align with
Bob Giordino, who used to be the CEO and COO
of New York Sports Clubs, which subsequently prior

(03:04):
was also a BRS portfolio company for many, many
years on its successful run over several recapitalizations of
the company. Now as a company grows and as they
prove out their business model and their average unit volumes and their
profitability, who comes knocking at the door? Real estate developers.
Because they know that these guys have a box that's proven, has

(03:26):
KPIs that work, and you know what else they're gonna do? They're most likely gonna
pay their rent, and they're gonna pay it on time. So real estate
groups line up to say, hey. I'll build an EOS for you. Okay? You put
in the equipment. I'll build it out for you, but give me a ten or
eleven or fifteen year lease so I can at least monetize what
that investment is for me. So EOS started to grow,

(03:48):
not off their own balance sheet, but basically off the balance sheets of real estate
developers. And that is the key to success in the health club or any bricks
and mortar when someone else wants to fund your build out. Obviously, they probably
took out debt. I know they had Golb Capital in there. And then
my good friend, Brian Smith, at Northpoint, between Piper Sandler
and Northpoint, was able to sell the company to our good friends at TSG

(04:10):
Consumer. And the thesis was, hey. Let's take this company and go for
one seventy five. They published two two fifty. I think they're gonna go to three
fifty in the next three to five years. And Eos is most likely a candidate
to be an IPO business and a publicly traded company in
our h a l o, halo health active
lifestyle and outdoors segment. So congratulations to the

(04:32):
team. The story behind the story that people need to know is that
the reason why you get a high valuation and you get someone to pay a
billion 5 for your business when you have over a hundred million dollars of
EBITDA is because you have proven that you could grow. You
have proven that you can execute. You have proven that you have the team and
infrastructure and vision to continue to innovate as

(04:54):
well as backfill. Keep your boxes fresh, keep them
clean, and get eight to 15,000 members per club. I don't know the exact
numbers, but I know that they're very strong. As people move into
the Sun Belt, continue to do that, Eos is gonna be a beneficiary
of that. And when Eos comes to town, watch out
because they've got a killer business model. It's a killer experience. It's

(05:16):
a strong brand, and they are one of the bellwethers in our
industry, and I hope they will be for the next several years. So congrats to
the entire team. Congrats to the buyer and seller when this closes in a couple
months. Shout out to Bruce, to Bob, to Rich, and to
Richard Pyle. We expect back in the office shortly and return to the
office and return to work. Good to see you. I hope this fast break

(05:38):
helped understand why you build a business that's valuable, grow it
by 10 x, and get paid for the value that you've created. Have a good
weekend. PDMO over and out. Checking in from San Diego,
Fit Social, and we'll catch up with you next week when we do a tour
of what the Fit Social guys are doing with expanding their business
from a health club to a social to a lifestyle brand that

(06:01):
is getting a lot of press in San Diego. Over and out.
PDML. Bam.