Mindbody, a leader in fitness and spa software and services with 67,000 subscribing businesses in 124 countries, announced it reached an agreement to be sold for $1.9 Billion to Vista Equity. The company will now enter a 30 day “Go Shop” period.
At the time of the announcement, the deal represented a 68 percent premium to Mindbody’s depressed stock price, which was down 49 percent for the year. There has been a major flurry of speculative activity since then.
Mindbody provides a comprehensive SaaS platform for its fitness, spa and salon services. While anchored by appointment scheduling software, ancillary features include payments, promotions, leads, analytics, and business and personnel management. Software and services represent 64 percent of its revenue; payments represent 35 percent.
Several years ago, we noted that scheduling potentially held the key to capturing a piece-of-the-action for SMB service revenues. At that time, more than 75 companies competed for shares in the marketplace, including such companies as Schedulicity, Booker, Square, Intuit, ReachLocal, Agendize, GenBook, MyTime and MaxiPage.
Of those, Mindbody, based in San Luis Obispo, CA, has emerged as the market leader. It went public in July 2015, and recently bolstered its offering and subscriber count, spending $150 Million to acquire Booker Software, a top competitor (who I consulted for). It also spent $15.3 Million on FitMetrix, a cloud-based performance tracking company.
The acquisitions and new features, especially payments, has boosted revenue per client to to $309 per month, up from $155 in 2015. The company has also added artificial intelligence capabilities for automated marketing via Frederick, which was included in the Booker deal. Altogether, Mindbody touted that it was well positioned to leverage“Neighborhood Network Effects” that would generate additional business for its subscribers.
But investor doubts emerged this year, in part due to looming competition from Google and others; difficulties in integrating the new acquisitions, a massive hack of the FitMetrix database, and a small, unexpected drop in accounts this year. Broader investor doubts about the overall concept of a SAAS driven- spa/salon/fitness center may have also entered the mix.
Looking forward, Vista Equity says it intends to keep business-as-usual for at least a year, with jobs and salaries to be kept at current levels. The investors, however, have a history of closing down headquarters post- acquisition. Some fear was expressed in the local press that the company might eventually move out of its central California location, which provides proximity to Cal Poly, a top tech school, but also has a relatively high cost of living and is off the beaten track in terms of attracting executive talent.