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Barely completing its second year of delivering product, elliptical specialist Octane Fitness has been acquired by North Castle Partners, a private equity investment firm with a portfolio focused on healthy living, including Equinox health clubs.
In a deal that’s been in the works and rumored for months, it closed quietly in January for an undisclosed sum and terms.
Octane, which has established its mark successfully as a one-category company in a market that continually stresses diversification, told SNEWSÂ® nothing will change — no treadmills, bikes or other categories in its future, said Tim Porth, Octane executive vice president of product development and marketing and company co-founder along with Dennis Lee, CEO, both former Life Fitness executives.
“Octane is going to be run the same way,” Porth said. “It’s still Octane.”
The company (www.octanefitness.com) now has seven models of ellipticals — three commercial pieces ranging in price from $2,800 to $3,800, and four retail pieces with suggested prices from $2,200 to $3,600. It introduced itself without fanfare to the industry in a hotel suite at the August 2002 Health & Fitness Business show, to which Porth said he and Lee drove from Minnesota in a truck with the prototypes in the back. The product was first delivered in fall 2002 and has grown to be available at more than 300 retailers.
“If you run the right operation and you have the right product, people are going to want it,” Porth said about the one-category company’s growth and success.
Ben James, North Castle’s partner who focuses on the fitness area, told SNEWSÂ® the company has been interested in the fitness equipment sector for a few years, but it “hadn’t found the right situation until now.”
“We have looked at other equipment companies, and Octane was the first one we liked,” said James, who said the firm is also looking at “other things” in the sector that may come about in the next year or so.
“We weren’t for sale,” Porth said. “We were very happy doing what we were doing. Did we think it could happen? Yeah. But we just wanted to grow the right business.”
He added that growth is a bit scary, so even with an infusion of funds and insights from North Castle, Octane isn’t going to burgeon immediately, but will still take it slowly. Porth also said that North Castle is interested in cross-pollinating some of its companies’ resources. In addition to Octane and Equinox, NCP also owns Naked Juice natural juice and smoothie company, Grand Expeditions adventure and luxury travel firm, plus a day spa and substance abuse treatment company, among others (www.northcastlepartners.com). It sold EAS nutrition company in November 2004.
Ellipticals caught NCP’s interest because of the low-impact movement that is appealing to many people, especially as they age. Plus, James said, it’s a category that is still thriving.
“I’m only going to enter into a business deal where I trust the people,” James said, “particularly with a small company it needs to be thoughtfully run.
“It really starts with the people,” he added. “I like the way they run their business. It’s a question of focus.”
SNEWSÂ® View: This is a super coup by Octane to be able seemingly to continue the way it has operated but with an influx of some funding to help it along in manageable growth. It seems if a company makes the right product, for the right price, and has professional (and even nice!) people running it, it can continue to be successful without a full line of equipment categories.