Know exactly what to verify before acquiring a karate, BJJ, or MMA school — from EFT membership quality to instructor dependency and lease assignment risk.
Find Martial Arts Studio Acquisition TargetsMartial arts studios generate predictable recurring revenue through EFT memberships, but acquisition risk concentrates around owner-dependency, instructor retention, and billing quality. This guide walks buyers through the three critical phases of diligence to protect your investment and close with confidence.
Verify that recurring revenue is real, documented, and transferable — not inflated by the owner's personal relationships or informal cash-based billing practices.
Pull 24 months of Mindbody or Zen Planner billing reports. Confirm monthly recurring EFT revenue, identify cash or manual payments, and calculate true monthly churn rate against stated membership counts.
Reconcile gross revenue on tax returns against billing software exports. Flag discrepancies exceeding 10%. Require seller to document all add-backs with receipts before proceeding to LOI.
Break down revenue by discipline, class type, after-school programs, and private lessons. Identify if any single program or demographic represents more than 40% of total studio revenue.
Assess how dependent the studio's revenue is on the selling instructor and whether the existing team can sustain operations through ownership transition.
Determine what percentage of weekly classes the owner personally teaches. If above 50%, earnout provisions or extended transition periods are essential to protect post-close revenue stability.
Review all instructor employment agreements, certifications, and any non-solicitation clauses. Identify instructors likely to follow the seller or open competing schools within 12 months of close.
Survey or analyze whether student reviews and referrals cite the owner by name versus the school brand. High personal-brand loyalty signals elevated churn risk post-acquisition.
Confirm the physical location is secure, the lease is assignable, and there are no undisclosed injury claims or insurance gaps that could create post-close liability.
Obtain landlord confirmation that the lease is assignable without punitive conditions. Verify remaining term is 3+ years and review any personal guarantee obligations transferring to the buyer.
Request copies of all insurance claims, incident reports, and litigation history from the past five years. Confirm current general liability and professional liability coverage is adequate and transferable.
Physically inspect all mats, bags, cages, and safety equipment. Confirm compliance with local fire, occupancy, and facility safety codes. Budget for replacement of aging or non-compliant equipment.
Verify the Martial Arts Studio acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Martial Arts Studio meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Martial Arts Studio must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Well-documented studios with 100+ active EFT members and reduced owner-dependency typically trade at 2.5x to 4.5x SDE. Owner-dependent schools with informal billing often fall below 3x without earnout protection.
Yes. Martial arts studios are SBA-eligible businesses. Most deals are structured with an SBA 7(a) loan covering 80–90% of the purchase price, a 10% equity injection from the buyer, and sometimes a small seller note.
Request a 24-month export from Mindbody or Zen Planner showing active member counts month-over-month. Calculate net churn by dividing lost members by starting count monthly. Anything above 5% monthly warrants a lower offer or earnout.
Negotiate a 6–12 month structured transition with the seller continuing to teach part-time. Simultaneously identify and certify a replacement lead instructor before close to reduce personal-brand dependency risk.
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