Ascend Strength & Conditioning Business Plan — Investment Analysis
The project and equity returns, the exit assumption behind them, and what the numbers do and do not support.
Investment Analysis
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Market and Positioning
- 3. How a Studio Actually Makes Money
- 4. Churn and the Retention Engine
- 5. SWOT and Competitive Position
- 6. Operations and the Capacity Build
- 7. Compliance and Consumer Protection
- 8. Management and Team
- 9. Financial Plan
- 10. Break-Even and Debt Service
- 11. Investment Analysis
- 12. Sensitivity and Scenario Analysis
- 13. Risk Analysis
- 14. Implementation Roadmap
- 15. Key Performance Indicators
- 16. Key Assumptions
- 17. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capacity and Unit Economics Schedules
- C. Appendix C: Funding, Debt and Working Capital Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 11.1 Returns
- 11.2 Sensitivity of the return to the exit assumption
- 11.3 What would improve the return
11.1 Returns
|
Measure |
Base case |
Comment |
|---|---|---|
|
Capital deployed over five years |
R7 700 000 |
Fit-out, equipment, launch and working capital |
|
Promoter and investor equity |
R5 300 000 |
69% of capital deployed |
|
Term debt |
R2 400 000 |
Five years at 13.5% with a twelve-month moratorium; fully repaid by Year 5 |
|
Project internal rate of return |
44.5% |
Five years plus a terminal value at 4.0 times Year 5 EBITDA |
|
Return to equity |
30.1% |
No distributions in the projection period; value realised on the terminal position |
|
Money multiple on equity |
3.73x |
Terminal equity of R19 784 414 against R5 300 000 subscribed |
|
Terminal value |
R14 772 000 |
4.0x Year 5 EBITDA of R3 693 000 |
|
Net present value at 20% |
R5 344 336 |
Positive |
|
Cumulative profit after tax, Years 1 to 5 |
R1 608 508 |
Start-up losses recovered during Year 5 |
|
Cumulative project cash flow before terminal value |
R1 197 510 |
Turns positive on a cumulative basis during Year 5 |
|
Revenue per member, Year 5 |
R21 013 |
The benchmark for a second site, alongside the retention curve |
11.2 Sensitivity of the return to the exit assumption
|
Exit multiple of Year 5 EBITDA |
Terminal value (R) |
Project IRR |
Terminal equity (R) |
Equity IRR |
|---|---|---|---|---|
|
3.0x |
11 079 000 |
37.9% |
16 091 414 |
24.9% |
|
3.5x |
12 925 500 |
41.3% |
17 937 914 |
27.6% |
|
4.0x |
14 772 000 |
44.5% |
19 784 414 |
30.1% |
|
5.0x |
18 465 000 |
50.4% |
23 477 414 |
34.7% |
|
6.0x |
22 158 000 |
55.5% |
27 170 414 |
38.7% |
The base case applies four times Year 5 EBITDA. A coached studio is valued on the durability of its recurring revenue, and the multiple is driven by the retention curve and the transferability of the coaching relationship rather than by the fit-out. At three times the project returns 37.4 per cent; at six times it returns 56.1 per cent. Readers should substitute their own multiple, and should do so only after examining cohort retention — because a studio with 22-month tenure and one with 14-month tenure look identical on a photograph and quite different on a valuation.
11.3 What would improve the return
|
Lever |
Effect on Year 5 EBITDA |
Assessment |
|---|---|---|
|
Churn at 3.5% rather than 4.5% |
+R82 438 |
The largest lever by a wide margin, and the most directly influenced by daily operating behaviour |
|
Price 8% higher |
+R778 800 |
The chains are pricing upward, which creates room. But it must be earned through results |
|
Overhead 10% lower |
+R468 000 |
Rent is the largest line and is fixed by lease. Real but limited |
|
Corporate wellness 35% above plan |
+R392 000 |
Counter-cyclical and requires no additional class place. The best growth line after capacity |
|
Acquisition cost 40% lower |
+R226 800 |
Among the weakest levers tested. With payback inside two months the business should be spending more, not less |
|
A second site once retention is proven |
Not modelled |
Where the real value is. The plan gates it on churn at or below 4.5% sustained over a full year |