Do You Know What Your Gym is Worth Today?

Even if you never plan to sell, you should.

I closed out my GAT talk with a question: do you know what your gym is worth today?

Even if you never plan to sell, you should. Because you might want to someday, and “someday” has a funny way of showing up before you’re ready.

I bought a job, not a business

In 1997, I bought 50% of an existing gym. The owner worked about 10 hours a week, so it looked like a business. But I needed a salary and the flexibility to raise my daughter, which meant I was there every day: front desk, phones, flyers, billing, bank deposits, covering classes when coaches called out sick. I was in over my head.

Since then I’ve been through a partnership, a move to a bigger facility, buying our building in 2002 (real estate is still the best retirement plan I know), startups, a few expansion attempts that flopped, and several sales: Illinois in 2017, a swim school in 2023, and our Burbank and Canyon Country gyms in 2025. The biggest lesson: be ready at all times.

Why most gyms aren’t sellable

It usually comes down to three things:

• • Owner-dependent. You ARE the business.

• • Messy financials. Most owners are teachers first, so books get done when taxes are due.

• • No systems. You’re doing everything, so nothing is documented.

No structure, no deal.

Think like a buyer

Buyers want predictable recurring revenue (autopay through a system like iClassPro or JackRabbit), clean and timely financials, strong margins, and systems and leaders already in place. They’re buying a machine, not your hustle.

That starts with your books. Could you hand your financials to a buyer today and feel confident? Most owners can’t. Many run personal expenses through the business to save on taxes. We learned the hard way when we went to buy our first building and the banker wouldn’t add those expenses back to show we were making more than our tax returns said. (It’s also not legal to lower your profits that way.) Messy books mean discounted offers.

EBITDA and discretionary income

EBITDA is earnings before interest, taxes, depreciation, and amortization. Start with net income, then add back interest, taxes, and depreciation and amortization (which are accounting entries, not cash leaving your bank account). It’s the truest measure of what your business actually earns.

For a small business, buyers go one step further and add back your salary, related payroll taxes and benefits, personal expenses on the books, and one-time expenses from the last 12 months. That gives you discretionary income. Then a multiple gets applied.

Here’s an example for a fictional Gym ABC:

• • Net income: $25,000

• • Owner’s salary: $100,000

• • Owner’s payroll taxes (7.65%): $7,650

• • Cell phone: $1,200

• • Auto expense: $5,000

• • Personal travel: $2,000

• • Total discretionary income: $140,850

At a 3x to 5x multiple, Gym ABC is worth $422,550 to $704,250.  

These are examples of ranges for value.  Always consult with an expert to obtain a professional, industry-specific valuation.  Click HERE to connect with the experts to learn more.

Small changes, big payoff

Every $10K of added annual profit is worth $30K at 3x, or $50K at 5x. Here’s how three small moves play out for a $1M gym with 575 enrollments at $145 a month:

• • Pricing: Raise tuition $10 a month (about 6.8%) and sales go up $69,000. Added value: $207,000 to $345,000.

• • Class capacity: Add one child to half your classes and that’s about 60 more enrollments at $155 a month, or $111,600 a year, with payroll unchanged. Added value: $334,800 to $558,000.

• • Payroll: Trim teaching and admin payroll (50% of revenue combined) by 2% and you save about $10,008 a year. Added value: $30,024 to $50,040.

Together, that’s roughly $571,824 to $953,040 in added value, taking Gym ABC from about $422K–$704K to somewhere around $1M to $1.7M. Net income goes up $190,608 a year.

Make it repeatable, make it predictable

Owner dependence kills deals. If you’re required, you’re a liability. Build a leadership team that runs without you, shift day-to-day decisions to staff, and document your role so it can be handed off. At minimum, document three systems: staff training, class structure, and your sales process.

I once asked a gym owner what his secret was. He’d had a serious health scare that forced him to step away, and 30 years of building systems paid off. He had job descriptions, a site manager running each location, leaders trained on class fill rates and payroll, and a student recognition program for retention. He recovered, and my partner and I bought his locations in 2020 because of his team.

Buyers, bankers, and investors also hate surprises. Track retention and enrollment monthly, because most lenders and investors want at least two years of records. Kids’ fitness tends to hold steady in good times and bad (parents will skip their own nail appointment before they skip their kid’s class), and steady is what earns a premium multiple.

Don’t overlook the lease or your paperwork

Lease: Buyers want 5+ years remaining, a lease that’s transferable to a new owner (with renewal options), and rent that lines up with your revenue. Typically that’s 12% to 18% of revenue, or 18% to 22% in expensive areas like Southern California. In our most recent deal, I didn’t learn until the final week that the elderly landlord had to personally sign the lease assignment. We got it done, but my lesson: start that conversation as soon as the LOI is signed.

Structure: Have clear, documented ownership, a clean entity setup (LLC, S-Corp, etc.), and your corporate documents in a digital folder so you can send them to a banker or buyer fast. Outstanding workers’ comp claims or other legal issues can spook buyers. These are fixable, but they take time.

What multiples look like

• • 2x EBITDA: higher risk, owner-dependent, poor systems.

• • 3–4x EBITDA: average risk, some systems, growing revenue.

• • 5x+ EBITDA: lower risk, strong systems, consistent growth.

A gym earning $150K in EBITDA is worth $300K at 2x or $750K at 5x. The difference is entirely in how it’s built. (These ranges come from my own experience and will vary by buyer and market.)

If you aren’t sure where to start, our team is here to help. Click HERE to connect with us.

Start early

Realistically, plan on 12 to 36 months to get exit-ready: assess where you stand now, build systems in year one, optimize profit and clean up books in year two, and be exit-ready by year three. Buyers will want to see the last two years of trends and will base value on the trailing 12 months, so last-minute prep means lost value.

Three things cost owners the most: waiting too long, poor financial tracking, and staying too involved. All three are preventable.

Your action plan

1. Clean up your financials. Separate personal and business and get accurate P&Ls.

2. Find your real profit. Calculate true EBITDA with defensible add-backs, then apply a multiple. Do you have a number?

3. Reduce owner dependence. Delegate decisions and build your leadership team.

4. Document key systems. Staff training, sales process, class structure.

Start with step one this week, not next quarter.  If you need help cleaning up or analyzing your financial records, we can help. Click HERE to connect with our team.

Build it like you’ll sell it

Stephen Covey said to begin with the end in mind. A sellable gym is simply a well-run gym: more profit, more freedom, and a better business. Even if you never sell, you win.

The best businesses to own are the ones you could sell.

Want help figuring out what your gym might be worth? Reach out anytime, I’m happy to walk through it with you.

— Georgette Cutler – Cutler Belle Group

jettcutler@cutlerbellegroup.com

Adapted from a live talk at GAT-2026, with AI assistance in drafting.