Greg Glassman, founder of CrossFit, Washington, DC, has bought the 50 percent share of the company owned by his wife, Lauren, who had had an agreement to sell her share to private equity firm Anthos Capital.
The transaction was completed Wednesday morning, Greg Glassman said today in an interview with Club Industry. The purchase was $16.09 million—the amount Lauren Glassman would have received after taxes upon the sale of her stock to Anthos Capital, Menlo Park, CA, which approached her last year with its $20 million offer. According to a judge’s order, Greg Glassman had until today to complete the transaction.
“I paid it, and I now own 100 percent of the stock,” Glassman said by phone from Amelia Island, FL, where he spoke to business leaders at the SPN annual meeting. “It’s over. We win.”
Glassman told Club Industry that Summit Partners, Boston, provided the $16.09 million loan for the transaction. Summit Partners, a venture capital firm, has invested in the industry in the past, most notably Snap Fitness, Chanhassen, MN.
The Glassmans are still finalizing divorce proceedings in the state of Arizona, he says. They also are finalizing a lawsuit filed in July in the state of Delaware involving Greg Glassman’s purchase of an $850,000 airplane that he uses for business. Lauren Glassman claims that her husband purchased the airplane using company funds without her knowledge or approval. (The Glassmans make up CrossFit’s two-member board of directors.)
“This is a harrowing ordeal,” Glassman said. “It pulled me and half a dozen absolutely critical staffers from their appointed duties for six months. At one point, there were over 30 law firms involved with this thing in three states. [We] grew the company, and we’ve absorbed all of our costs. We’ve paid all our legal fees, and we paid cash for the airplane. We have more money in the bank than we’ve ever had in the bank before.”
Greg Glassman filed a lawsuit against Anthos Capital last month in the state of California for tortious interference.
The proposed deal between Anthos Capital and Lauren Glassman generated concern among CrossFit affiliates, who aired their views on Facebook and on an Internet message board. Greg Glassman says that Anthos would have had affiliates sell supplements, equipment and apparel to earn more profits, much like a franchise system.
“What we have—those of us that manage this thing—we just have the legal and moral authority to lead the affiliates,” Glassman says. “We own the brand name and are protecting the brand.”
Bryan Kelly, a managing director at Anthos Capital, was not immediately available for comment. In August, Kelly told the San Jose (CA) Business Journal that he wanted Greg Glassman to maintain control of CrossFit’s operations.
“I’m not going to do anything to hurt that community,” Kelly, himself a CrossFitter, told the newspaper. “I want to help it. I want to help grow it.”
Also in August, Kelly and Lauren Glassman posted a YouTube video discussing their agreement. She said Greg Glassman had made offers to purchase her stake in the company, but that the offers were not “in the same universe” as Anthos Capital’s $20 million offer.
“My decision to sell to Anthos instead of Greg was not motivated by spite but rather because I felt it was a way better offer,” she says in the video. “The reason why I decided to sell 50 percent interest in CrossFit to Anthos Capital in particular is because I believe it and Bryan Kelly are the right people to take CrossFit to the next level at an important point in time.”
CrossFit affiliates pay a $3,000 annual licensing fee, and their trainers must successfully complete CrossFit’s $1,000 level one course to get certified.
Greg Glassman says 5,000 CrossFit studios are in operation around the world with 400 more in the pipeline.
“Each quarter of this year was our best quarter ever,” Glassman says. “This (CrossFit) community saved itself with our leadership.”