Letter of Intent Template for Acquiring a Gym or Fitness Business

Parties and Business Description

Identifies the buyer entity, seller, and the specific business being acquired including DBA name, facility address, and a brief description of the gym's operations such as membership model, square footage, and primary revenue streams.

💡 Be specific about the business description. If you are acquiring only the gym assets and not a related entity such as a separate personal training LLC the owner operates, exclude it explicitly here. Sellers sometimes structure personal training revenue outside the main entity to inflate SDE — naming the business precisely forces clarity on what is and is not included in the deal.

Proposed Purchase Price and Valuation Basis

States the total proposed purchase price, the SDE or EBITDA multiple being applied, and the trailing period used for valuation. For gym acquisitions in the lower middle market, purchase prices typically range from 2.5x to 4.5x SDE, with the multiple driven by membership stability, lease quality, and revenue diversification.

💡 Anchoring the multiple explicitly to verified membership metrics is critical in gym deals. If due diligence reveals churn is running at 8% monthly rather than the represented 4%, you need written grounds to reprice. Sellers will resist tying price to churn thresholds — push for it regardless. A boutique studio with diversified revenue from personal training and specialty classes justifies a higher multiple (3.5x–4.5x) than a pure membership gym with high month-to-month mix (2.5x–3.0x).

Deal Structure and Asset Purchase Scope

Specifies that the transaction is structured as an asset purchase, lists the categories of assets being acquired, and identifies any excluded assets or liabilities. Most gym acquisitions are asset purchases to allow buyers to step up the tax basis on equipment and avoid assuming unknown liabilities.

💡 Equipment schedule negotiation is often contentious. Request a complete equipment inventory with purchase dates and condition ratings before or concurrent with the LOI. Sellers routinely overvalue equipment — a fleet of treadmills purchased eight years ago carries near-zero book value and may need replacement within 18 months of close. Negotiate a cap on buyer's capex exposure by excluding equipment the seller cannot document maintenance history for, or price a credit into the purchase price.

Financing Structure and SBA Contingency

Outlines how the buyer intends to finance the acquisition, including SBA 7(a) loan terms, equity injection amount, and any seller note. Makes the LOI contingent on SBA lender approval to protect the buyer.

💡 SBA lenders scrutinize gym deals heavily due to high equipment depreciation and soft goodwill. Expect lenders to require a 10-year lease remaining or lease plus option period to match the loan term. Surface lease assignment risk early — if the landlord will not assign a lease with at least 10 years remaining, SBA financing may be unavailable entirely. Sellers resistant to carrying a note are a yellow flag; their willingness to carry 10–20% signals confidence in the business's ongoing performance.

Membership Retention Earnout

Defines an earnout mechanism tied to active membership count or MRR at specified intervals post-close, protecting the buyer against rapid member attrition following ownership transfer — one of the most common value destruction events in gym acquisitions.

💡 Sellers will fight earnouts aggressively, particularly if they believe their community loyalty is strong. Frame the earnout as mutual protection — if the gym retains its members, the seller gets paid in full. Set the retention thresholds at realistic levels: 85–90% at 6 months and 80–85% at 12 months are common for independent gyms. Boutique studios with strong instructor-driven loyalty face higher attrition risk when a beloved trainer leaves, so consider tying a portion of the earnout to key staff retention as well.

Lease Assignment and Landlord Cooperation

Makes the transaction explicitly contingent on the buyer's ability to obtain a lease assignment on terms acceptable to the buyer, and outlines Seller's obligation to facilitate landlord introduction and cooperation. Lease failure is the single most common deal-killer in gym acquisitions.

💡 Never waive the lease contingency. Gyms are immovable businesses — the location, equipment, and member base are all tied to that specific address. A seller who cannot deliver a clean lease assignment is selling you a business you cannot operate. If the landlord wants to use the sale as an opportunity to reset the lease to market rate, model the impact on SDE before agreeing. A rent increase of $5,000/month can reduce SDE by $60,000 annually and directly reduce the defensible purchase price by $150,000–$270,000 at typical multiples.

Due Diligence Period and Access

Defines the length of the due diligence period, the categories of information and access the buyer requires, and the standard of seller cooperation expected during the review process.

💡 Request 36 months of billing platform data, not just 12. Month-to-month membership businesses can mask seasonal churn or a recent declining trend in a single-year snapshot. Cross-reference stated MRR against actual bank deposits for at least 12 months — discrepancies between billing software totals and bank deposits are a red flag for failed payments being counted as active revenue. Schedule an on-site equipment walkthrough with a qualified technician to assess replacement capital needs independently.

Exclusivity Period

Grants the buyer an exclusive negotiating window during which the seller agrees not to market the business, share confidential information with other parties, or negotiate with other potential buyers.

💡 Forty-five days is the minimum reasonable exclusivity window for a gym acquisition given the complexity of lease assignment, equipment inspection, and SBA lender engagement. Request 60 days if the facility is large, multi-location, or the lease situation is complicated. Sellers will try to limit exclusivity to 30 days — push back, as rushing due diligence on a gym almost always results in missed issues with equipment condition or membership data integrity.

Conduct of Business Pre-Close

Requires the seller to operate the gym in the ordinary course of business between LOI execution and closing, preventing material changes to pricing, staffing, membership terms, or equipment that could impair the value being acquired.

💡 This clause matters more in gym deals than in most business acquisitions. A motivated seller anxious to close has a short-term incentive to run promotional offers that spike membership count before the snapshot date, only for those members to cancel within 60 days post-close. Require that any new memberships added between LOI and close be at standard pricing with no free-month promotions. Flag any unusual promotional activity as a potential earnout manipulation concern.

Non-Solicitation and Transition Assistance

Restricts the seller from competing with or soliciting members or staff post-close, and commits the seller to a reasonable transition period to transfer relationships, operational knowledge, and community goodwill to the buyer.

💡 Non-competes in gym deals are especially important when the seller is a personally beloved trainer or community figure. Courts have historically upheld reasonable geographic and time-based non-competes for business sales. Negotiate the longest and widest non-compete your state courts are likely to enforce — typically 2–3 years and 5–10 mile radius for a single-location gym. If the seller will also provide personal training services post-close as a retained contractor, define those terms explicitly to avoid ambiguity about competitive activity.