Buying a Climbing Gym for Sale:The Due Diligence Guide
- gheverly
- Mar 26
- 4 min read
There are more and more climbing gyms for sale these days. As the industry grows and matures we are beginning to see the standard exfoliation of businesses and the exchange of ownership that happens. Purchasing a climbing gym is an exciting opportunity, but it also requires thorough due diligence to ensure a sound investment. Whether you are an entrepreneur looking to enter the climbing industry or an experienced gym owner seeking expansion, conducting a detailed assessment of the business is crucial. Below are practical steps, tools, and resources to guide you through the due diligence process.
Evaluate the Financials
Start by thoroughly reviewing the gym’s financial health. This is absolutely critical. This will begin to point a clear picture of the problems and opportunities you will inherit if you purchase the business. Of note, sometimes buying a business that is NOT performing well can be a good thing. Assuming you can make it better, understand the story behind the numbers, etc. The goal here is to use past performance to build a believable model for the future and therefor value the business.
Request Financial Statements: Obtain at least three years’ worth of profit and loss statements, tax returns, and balance sheets.
Revenue Items to Look For:
Stable membership growth - a lack of stable and steady member growth is a key indicator of a faltering business (or an opportunity!)
Revenue consistency - If revenue has been up and down, this is indicative of an unstable business.
Expense Items to Look For:
Major fixed costs like rent, mortgage, liability insurance. and debt financing. Some of these items may carry forward in the business, some should be removed once the purchase is completed (For example, your purchase should be a debt-free transaction, meaning any purchase price will first go paying off any debts carried)
Personnel costs are probably the biggest expense, and are a major indicator of future success and costs. I usually look to have personnel be about 30% of top line revenue.
One time costs. Are the owners buying themselves cars or have their been big one off expenses throwing the averages off? Find these and consider them in your valuation of the business by removing them when considering how the business might perform in the future.
Debt and Liabilities: Check for outstanding loans, unpaid bills, or legal claims.
QUICK TIP: All financials reviewed should be professionally audited and approved by a licensed CPA
Inspect the Facility and Evaluate the Culture
The gym’s physical condition significantly impacts operational costs including investments which may be needed to bring the gym to your standard or to execute on your plan for growth and improvement. Carefully evaluating both staff and customer culture is key to understanding any challenges or opportunities you may be taking on that can't be found simply by reviewing financials or talking to the current owners.
Building Condition: Evaluate the structure, HVAC, electrical, and plumbing systems. Hire a professional if needed. Ensure all work done has been permitted and done by licensed contractors. Ensure all structures have been signed off on by the city and a structural engineer. Ensure the building is zoned for a climbing gym and that there is a legal certificate of occupancy in hand.
Climbing Wall and Flooring Assessment: Inspect walls, holds, ropes, harnesses, crash pads, and flooring for wear and tear. If much of this needs replaced it could tank the profitability of the business.
Safety & Compliance: Verify that the gym and the operations meet local, state, and industry standards. Hire legal counsel to support this review if needed. Take a look at all employment agreements, handbooks, etc. Review pay history, certifications and licenses, etc.
Staff Culture & Satisfaction: Interview staff, ask them about their experiences at the gym, what they like and don't like. Ask them about blindspots you may have as an incoming owner. Ask leaders & managers what they struggle with or if there are any problematic employee issues that need addressed
Customer Feedback: Read online reviews and survey members to gauge satisfaction levels.
Community Engagement: Attend gym events or join online forums to understand customer sentiment.
Assess Membership & Market Demand
Understanding the customer base and market potential is essential. Past performance is one thing, but understanding the potential way forward is even more important.
Membership Data: Request current membership numbers, retention rates, and cancellation trends. Include data such as Member lifetime value, average member billing amount and more.
Demographics: Evaluate the target audience using census data and climbing community surveys.
Local Competition: Research other climbing gyms and fitness centers in the area. This will help you understand the scope of the marketplace.
Growth Potential: Identify opportunities for expansion, such as youth programs, new offerings, or additional amenities.
Review All Legal & Operational Documents
Ensure all contracts, permits, and legal agreements are in order. ESPECIALLY LEASES.
Lease Agreement: Review the lease terms, including rent increases, maintenance obligations, and subletting clauses
Business Licenses and Permits: Verify compliance with all business regulations
Employee Contracts: Assess staffing agreements, payroll records, and benefits.
Slow is Smooth, Smooth is Fast
Purchasing a climbing gym is a rewarding venture, but due diligence is critical to mitigating risks and maximizing success. By thoroughly evaluating financials, inspecting the facility, assessing market demand, and reviewing legal obligations, you can make an informed decision. Leverage industry tools and expert guidance to ensure a smooth acquisition process.
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