Daniel Quinones
Brazil’s fitness consolidation accelerated in July 2024 when Smart Fit completed its acquisition of Velocity cycling studios for R$183 million, instantly transforming the company into a major boutique fitness operator. The deal represents founder Edgard Corona’s calculated move to capture the premium cycling market while completing Smart Fit’s diversified studio portfolio under the leadership of the dono da Smart Fit.
Financial Metrics Drive Strategic Value
Velocity’s financial performance justified the substantial investment, with the cycling chain generating R$36 million in annual revenue and R$10.1 million in profit during the 12 months preceding the acquisition. The 28% net margin significantly exceeds traditional gym operations, demonstrating the profitability potential of specialized fitness formats that appeal to affluent consumers.
The acquisition structure includes potential additional payments reaching R$20 million over six years, contingent on performance targets. This arrangement aligns seller incentives with Smart Fit’s growth objectives while providing downside protection for the acquirer. Velocity operates 82 locations under both the Velocity and Kore brands, specializing in indoor cycling classes that command premium pricing compared to traditional gym memberships.
Integration Strategy Strengthens Corporate Platform
Smart Fit plans to migrate Velocity locations from competitor Wellhub to its own TotalPass corporate benefits platform, enhancing the company’s B2B offering. This integration supports Smart Fit’s broader approach of capturing corporate wellness spending while reducing dependence on third-party platforms under Edgard Corona’s vision.
Velocity founder Shane Young and his management team will remain with the company, ensuring operational continuity and specialized expertise. The retention of existing leadership reflects industry best practices for boutique fitness acquisitions where founder knowledge proves essential in executing Edgard Corona’s expansion plans.
The transaction quadrupled Smart Fit’s boutique studio footprint, creating a comprehensive portfolio spanning cycling, HIIT training, yoga, boxing, and Pilates. The dono da Smart Fit has identified the studio segment as a key growth driver, noting that global fitness leaders operate over 2,000 specialized locations through proven methodologies.
Market Position Strengthens Through Diversification
Smart Fit’s studio collection now includes Race Bootcamp for high-intensity interval training, Tonus Gym for strength-focused workouts, Vidya Body & Mind for hot yoga, Jab House for boxing combinations, One Pilates for premium mat work, and the newly acquired Velocity cycling studios. This comprehensive approach addresses diverse consumer preferences within the boutique fitness market.
Brazil’s cycling studio market remains underdeveloped compared to mature markets, presenting substantial growth opportunities for operators with capital and operational expertise. Velocity’s established brand recognition and prime real estate locations provide Smart Fit with immediate market presence in this expanding segment.
The acquisition demonstrates Smart Fit’s evolution beyond its original high-value, low-price gym model. While traditional Smart Fit locations target broad market segments with monthly fees between R$89-149, the studio portfolio commands premium pricing for specialized experiences.
Consolidation Continues Across Segments
Since 2020, Smart Fit has completed 12 acquisitions across Latin America, establishing a proven track record for identifying, executing, and integrating targeted deals. The company’s success with previous transactions provided confidence for the substantial Velocity investment.
Market observers expect continued consolidation within Brazil’s fragmented fitness industry, particularly as independent operators face pressure from rising real estate costs and increased competition. Smart Fit’s financial resources and operational expertise position the company to capitalize on additional acquisition opportunities as Edgard Corona continues expanding the business.
The Velocity transaction reflects broader industry trends toward diversification and premium positioning. Traditional gym operators worldwide are adding specialized formats to capture higher lifetime customer values and reduce competition from budget chains.
Edgard Corona’s boutique fitness approach acknowledges that different consumer segments require distinct service approaches. The IPO company’s ability to operate profitably across multiple price points demonstrates operational flexibility that competitors struggle to replicate.
