Mindbody has triggered the process by which it will acquire ClassPass
Founder Payal Kadakia, who will exit the business, says the deal is a milestone for a female-founded company
The deal coincides with a cash injection of US$500m into the business from global investment house Sixth Street
Josh McCarter will lead the combined business, with Fritz Lanman acting as president of ClassPass and Mindbody Marketplace
Mindbody has announced it's buying ClassPass, the consumer wellness subscription service that enables people to use a range of gyms, studios and wellness facilities for one monthly subscription.
The deal will bring two of the industry’s most prominent tech businesses together to offer both business- and consumer-facing services. They're also expected to jointly fast-track the development of their corporate wellness business.
"By leveraging the best of both companies’ technology and expertise, we'll provide studios with tools to help them grow and thrive, while also driving more consumers to their businesses,” said Josh McCarter, CEO of Mindbody. “Our companies share a singular focus on democratising wellness by bringing these experiences to more people, in more places."
The acquisition will be an all-stock deal and will integrate the two teams, with ClassPass continuing to operate its app and website and Mindbody continuing to operate its app to drive 'discovery'. ClassPass will become a brand within the Mindbody portfolio.
Following the completion of the deal, Fritz Lanman, CEO of ClassPass, will move to the role of president of ClassPass and Mindbody Marketplace and will work alongside McCarter.
ClassPass founder Payal Kadakia, who is thought to be exiting the business, said: “Our north star has always been how we can help people discover and seamlessly book soul-nurturing experiences.
“This acquisition will be a massive milestone for a female-founded company and I'm confident in the leadership of Josh McCarter and my long-time business partner Fritz Lanman to propel the business forward and continue delivering a best-in-class experience for consumers and business owners.”
In addition to the acquisition, Mindbody has also secured a US$500m investment from a group led by global investment firm Sixth Street.
Mindbody's majority investor and partner, Vista Equity Partners, will retain its involvement, while the new top team will see the addition of board members from ClassPass investors L Catterton and Temasek.
Recent research from both companies shows consumers are getting back to in-person health and wellbeing experiences, with nearly eighty per cent of consumers reporting that wellness is more important to them than ever.
Markets that have fully reopened are registering bookings at pre-COVID levels on the Mindbody platform, while ClassPass consumer volumes are running at 110 per cent of pre-COVID volumes.
“It's been a tough 18 months for everyone," said McCarter. "This acquisition will turbocharge our recovery and also comes at a pivotal time for the wellness industry as it continues to rebound from COVID-19 related closures."
There are strong synergies between the two businesses, says McCarter, with less than a third of customers being shared, creating opportunities for cross-selling. "Mindbody locations will feed into the ClassPass app," he told Fit Tech
, "improving the consumer experience, while also driving bookings for wellness businesses on the Mindbody platform."
“The ClassPass network includes many businesses already working with Mindbody. By combining our respective operations, we will create more seamless integrations and unlock new revenue opportunities for business owners using both services," said Lanman.
“For consumers using our marketplace and professionals enrolled in the ClassPass Corporate Program, our goal is to create greater choice and flexibility in the experiences they can book.”
In terms of global trading, ClassPass is currently active in 30 countries, with Mindbody in eight. The deal is expected to ramp up Mindbody's international expansion.About Mindbody
Best known for its SaaS platform that powers wellness businesses globally, Mindbody has remained focused on its mission to "help people lead happier, healthier lives by connecting the world to wellness".
The company acquired software house Booker and its SpaBooker system – originally founded by SpaFinder – in 2018.
Major milestones for Mindbody have included the creation of an integrated virtual platform, marketing automation tools and the introduction of Mindbody Capital, a product that gives small business owners access to finance to help them invest in and grow their business. About ClassPass
ClassPass offers data-driven, machine learning-based SmartTools to help operators manage excess inventory and market unsold time at revenue-maximised prices.
The company says studios on ClassPass typically experience a 30 per cent increase in reservation volume and a 15-20 per cent increase in revenue using SmartTools.
ClassPass also says fifty per cent of its members are new to boutique fitness, while eighty per cent visit a new studio for the first time using the platform.