NorthEdge Capital (NorthEdge), the private equity firm focused on investing in companies in the North of England, has backed the management buyout of Total Fitness, the Wilmslow-based health and fitness business.
NorthEdge has backed the management team, led by Chief Executive Richard Millman together with Warwick Ley and Brian Davidson of RooGreen Ventures, who alongside a partial realisation of their equity have reinvested in the business as part of the buyout. The transaction will see the existing management team receive significant new investment to support their next stage growth plans, which begin with the re-opening of the Total Fitness club in Wrexham in early April after a £1m+ refurbishment.
The transaction brings to a conclusion the highly successful turnaround of the business which has seen Brian Davidson and Warwick Ley work with Richard Millman and the management team over the last two years to deliver a significant growth in the membership base which has grown by 14 per cent since January 2013 and taken the business back into profit.
The UK health and fitness industry is a major contributor to the UK economy. It has continued to grow and, with the upturn in economic recovery and consumer confidence, the sector is expected to see a continued rise in activity and organic expansion by successful brands. The deal will see NorthEdge, RooGreen Ventures and the management team invest into the business in order to fund the continued refurbishment of and investment in the existing club estate, together with new business opportunities.
Ray Stenton, Partner and Head of New Business, Investment Director Tom Rowley and Investment Executive Gavin Bell led the deal for NorthEdge.
Ray Stenton, who will join the Board as Non-Executive Director, said: “Total Fitness is a great business with a fantastic brand. It has an ambitious investment strategy in place and we look forward to working alongside the management team to bring this to fruition and deliver on its growth objectives.”
Richard Millman, CEO at Total Fitness, said: “We are really excited, as a management team, to be working with NorthEdge as a new partner in the continuing success story that is Total Fitness Health Clubs. Ray and the wider team have taken the time to really understand our business and the management team and have gained a real understanding of the business’ fundamentals and the key drivers of our future growth.
“Total Fitness is in an extremely strong position, delivering an ambitious investment programme and continuing to see a rise in membership and growth in operating profit as a result. I look forward to working to realise our vision of being the dominant health club chain in the North of England. There is a real confidence and clarity within the business as demonstrated by our membership results, increasing profitability, and our major investment program. Everyone is tremendously excited about the further opportunities which are available in the coming years.”
Warwick Ley, who will remain on the Board as Non Executive Chairman, added “The results of the last 2 plus years at Total Fitness typify the tremendous achievement by each and everyone involved against what was a highly challenging backdrop. The team has defied many people’s expectations and they should be very proud of the formal endorsement of their achievements and future plans by NorthEdge. We approached NorthEdge to support the next growth phase as their admirable values and approach to business make them the ideal partner for Total Fitness.”
The deal is the eleventh for NorthEdge Capital, representing more than £135 million of investment into Northern businesses.
Deloitte (Andy Westbrook) provided corporate finance advice to NorthEdge, while KPMG completed financial and tax due diligence (John Moth and Steve Heath). Property due diligence was undertaken by Coffer Corporate Leisure (Lawrence Telford). GunnerCooke provided legal advice to NorthEdge (Tim Hamilton and Nick Ducker), while DWF (Jonathan Robinson) advised RooGreen Ventures and management. Mazars (Nick Johnson) and DLA Piper (Tim Lake) advised the vendors.
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