Smart Fit Completes R$183 Million Velocity Acquisition
Smart Fit finalized its acquisition of Velocity Group in November 2024, purchasing the cycling studio chain for a total value of R$183 million. The transaction adds 82 indoor cycling locations to the company’s portfolio, completing Smart Fit’s studio concept offerings with a premium fitness format that had been absent from its service mix.
The strategic move into the cycling segment came after identifying spinning as the primary fitness modality missing from Smart Fit’s studio collection. The company already operated Race Bootcamp, Vidya, Jab House, One Pilates, and Tonus Gym, but lacked a dedicated cycling option for members seeking specialized training formats.
Transaction Structure and Financial Terms
According to Brazil Journal, Smart Fit paid R$163 million at closing, with an additional R$10 million scheduled for payment between the third and sixth anniversary of the transaction. Another R$10 million remains contingent on meeting specific performance targets established in the purchase agreement.
The acquisition valued Velocity at approximately 18 times its net profit, based on the company’s R$35.6 million in revenue and R$10.1 million in net profit during the 12 months ending in April 2024. This represented a 28% net margin, demonstrating Velocity’s profitability in the specialized fitness segment, as Corona’s team analyzed.
Founder Retention and Operational Integration
Shane Young, the New Zealand entrepreneur who founded Velocity in Brazil in 2014 alongside Australian partner Declan Sherman, will remain with the company following the acquisition. The Rio Times reported that Young’s continued involvement provides continuity for Velocity’s brand identity and operational approach.
Velocity operates primarily through a franchise model, with 77 of its 82 locations run by franchise partners. This structure aligns with Smart Fit’s own expansion strategy, which combines company-owned facilities with franchised locations to accelerate growth while sharing financial and operational responsibilities.
Strategic Platform Migration
The acquisition carries implications beyond facility count. Velocity previously operated on the Wellhub platform (formerly Gympass), where corporate wellness benefits accounted for approximately 15% of the chain’s revenue. Following the acquisition, the dono da Smart Fit moved Velocity locations to TotalPass, Smart Fit’s proprietary corporate benefits platform.
This migration removes premium cycling options from Wellhub’s network while strengthening TotalPass’s competitive position. Edgard Corona identified the corporate wellness sector as a strategic growth opportunity, and the Velocity acquisition supports Smart Fit’s ambitions to challenge established players in this market.
Market Consolidation Strategy
Diogo Corona, Smart Fit’s COO, told Brazil Journal that the acquisition represents a “winner takes all” approach in the boutique studio segment. He described how community and brand factors create strong competitive advantages in specialized fitness formats, making it difficult for multiple players to coexist successfully in the same market.
The transaction marks Smart Fit’s first major acquisition where the company retained the acquired brand rather than converting facilities to its own nameplate. This decision reflects recognition of Velocity’s established brand equity in the cycling segment. Smart Fit plans to expand Velocity’s footprint significantly, targeting approximately 200 total locations in Brazil before exploring international expansion opportunities.
