From Minority Stake to Double EBITDA in 2 Years
New York-based Neel Bhargava breaks down how a minority investment into a Crunch Fitness franchisee turned into a home run, scaling from 10 to 74 locations with multiple recapitalizations along the way. Neel explains the value of thematic focus, outlines the opportunity of franchises, and spotlights the importance of strong management teams.
Neel Bhargava’s route to becoming an independent sponsor was unconventional; he was a growth equity investor and then a venture investor at the New York Times, among several other experiences. Neel pivoted into entrepreneurship by launching NB Group in 2016. What followed was a textbook example of how a flexible and relationship-driven approach can create outsized value.
The Crunch Fitness deal, Neel’s first as an independent sponsor, wasn’t a majority control buyout. It began as a minority investment behind a high-performing franchisee operating 10 gyms and generating $4.5m in EBITDA. Over just 18 months, the business doubled both in gym count and EBITDA. Today, it has grown to 74 locations and has been recapitalized multiple times, with Bhargava’s team still holding a passive minority interest.
The secret the success included working alongside a proven, high-performing management team. While many sponsors seek full control, Neel emphasized the flexibility independent sponsors can bring to the table.
This flexibility allowed NB Group to pivot from a planned majority deal into a minority structure when the sellers got cold feet, without compromising alignment or governance. Neel and his capital partners secured key minority rights, including veto power over capex and exit terms, allowing them to maintain influence without operational control.
Their success was also a result of a clear thematic focus. Instead of casting a wide net, NB Group narrowed in on high-value, low-price gym concepts in the health and wellness sector. Neel believes this space is both capital efficient and scalable, which he explains in detail during the interview.
Since launching NB Group in 2016, Neel has witnessed the independent sponsor space evolve from a fringe and frowned-upon model to a more widely recognized and competitive landscape. Today, more sellers and intermediaries understand what sponsors bring to the table, but deal flow remains the hardest part. As Neel puts it, raising capital has never been the real constraint. Finding proprietary, quality deals is (still) where the game is won.
Check today’s new episode of the Minds Capital Podcast with Neel Bhargava.
Keep reading
The 3-5-7x MOIC Underwriting Framework
Rick Apple built Upside Growth Partners out of Nashville after starting his career in the finance grind of New York. A Princeton grad turned entrepreneur, he has scaled 12 platforms while raising 5 kids at home. From a breakout children's clothing brand to roofing and beyond, Rick has proven that smart sourcing, deliberate underwriting, and rolled-up sleeves can compound into lasting success.
A Portfolio Marked Up at 10x MOIC
Stenning Schueppert, based in Austin, leads Evolution Strategy Partners, one of the most transparent and high-performing independent sponsors west of the Mississippi. A private equity veteran and zinger machine, Stenning shares refreshing insights on why the independent sponsor model beats traditional funds, how radical alignment drives better outcomes, and the simple math behind his portfolio's 10x MOIC markup.
Combining 2 Platforms to Reach $20m EBITDA
Zack Miller and his high school friend Johnny Lieberman combined their distinct backgrounds to launch Worklyn Partners, a dual platform marrying the VC-style upside of cybersecurity with the proven PE roll-up playbook in managed service providers (MSPs). Backed by $50m in committed capital, they have executed 7 acquisitions, keeping their IT services and cybersecurity businesses operationally separate, preserving the flexibility to merge or exit individually.
