Soho House's Take-Private Deal and the Strategic Value of Private Ownership for High-Growth Lifestyle Brands

The $9.00-per-share offer to take Soho House & Co. (SHCO) private has sparked debate among investors and analysts. At first glance, the price tag—18% above SHCO's August 18, 2025, closing price of $7.64—seems modest for a company with a 7.0% revenue growth in 2024 and a 14.1% rise in Adjusted EBITDA. Yet, when contextualized against SHCO's financials, industry benchmarks, and precedent transactions, the offer reveals a nuanced calculus of valuation, strategic rationale, and long-term potential.

SHCO's Financial Resilience and Expansion Momentum

Soho House's 2024 results highlight its dual strengths: membership-driven revenue growth and operational scalability. Membership income surged 17.2% to $418 million, while Soho Home and Scorpios contributed 6.2% growth in “Other Revenues.” Despite a $163 million net loss, Adjusted EBITDA reached $131.9 million, reflecting disciplined cost management and margin improvements in Food & Beverage operations. The company's 9.6% year-over-year membership growth—now 212,447 members—underscores its appeal as a hybrid social/retail platform.

However, SHCO's public market valuation remains anchored by its negative P/E ratio (-10.99) and a 22.96 EV/EBITDA multiple, which exceeds the Travel & Leisure industry median of 10.98. This disconnect between operational performance and market perception raises questions: Is the $9.00 offer a discount to intrinsic value, or a strategic exit for a company better suited to private ownership?

Precedent Transactions: Premiums for Scalable, Experience-Driven Models

Recent take-private deals in the lifestyle sector suggest that SHCO's offer may undervalue its long-term potential. For instance, the 2015 leveraged buyout of OneSpaWorld at $925 million (10.0x EV/EBITDA) and Therme Group's acquisition of Therme Erding (320 million in financing) highlight how private equity buyers reward businesses with recurring revenue, high margins, and brand equity. Similarly, Thule Group's $328.7 million acquisition of Quad Lock at 10.0x EV/EBITDA underscores the premium paid for tech-enabled, direct-to-consumer models.

SHCO's membership model—resembling a hybrid of subscription services and experiential retail—aligns with these trends. Its 62.1% gross profit margin and 11% Adjusted EBITDA margin in Q4 2024 suggest strong unit economics, while its 8% LTM revenue growth and 16% EBITDA growth indicate scalability. Yet, SHCO's public market EV/EBITDA of 22.96 lags behind the 385x multiples seen for niche wellness brands with similar growth profiles.

Strategic Rationale for Private Ownership

The case for private ownership hinges on three pillars: operational flexibility, capital efficiency, and long-term innovation.

1. Operational Flexibility: Public companies often face short-term earnings pressures that can stifle strategic investments. SHCO's 2024 expansion—three new Soho Houses and a Scorpios resort—demonstrates its ability to scale, but private ownership could accelerate such initiatives without quarterly guidance constraints.

2. Capital Efficiency: SHCO's $676 million net debt and 12% EBITDA margin suggest room for leverage. A private equity consortium could recapitalize the balance sheet, fund new ventures (e.g., digital memberships, co-working spaces), and optimize real estate holdings.

3. Long-Term Innovation: The $9.00 offer includes a Special Committee's review of SHCO's transformation initiatives, including a new ERP system and Chief Transformation Officer. Private ownership might enable faster execution of these plans, particularly in integrating AI-driven personalization or expanding into wellness tourism—a sector where Therme Group and OneSpaWorld have thrived.

Is $9.00 a Discount or a Strategic Exit?

The $9.00 offer represents a 38.25% premium to SHCO's July 8, 2025, closing price of $6.51 but falls short of its 52-week high of $8.47. Given SHCO's 22.96 EV/EBITDA and the 30.65 EV/EBITDA seen in March 2025, the offer appears to price in a conservative view of future growth. However, precedent transactions suggest that private equity buyers could justify higher multiples for SHCO's membership base, brand equity, and expansion pipeline.

For example, if SHCO's EBITDA grows at 15% annually (in line with its 2024 performance) and the EV/EBITDA multiple expands to 15x (closer to the industry median), the intrinsic value would exceed $10 per share. This implies the $9.00 offer may undervalue SHCO's long-term potential, particularly if the consortium can unlock synergies through operational efficiencies or strategic acquisitions.

Investment Implications

For shareholders, the decision to accept the offer hinges on two questions:
1. Can SHCO achieve higher valuations as a public company? The stock's volatility (52-week range: $4.60–$8.47) and negative P/E ratio suggest market skepticism. A private exit might offer certainty in an uncertain environment.
2. Does the consortium have the resources to scale SHCO's model? The involvement of a Special Committee and the consortium's track record in lifestyle brands will be critical.

For investors, the key takeaway is that SHCO's membership-driven model and expansion potential are undervalued in the public market. While the $9.00 offer may seem modest, it reflects the risks of public market volatility and the strategic advantages of private ownership. If the consortium can execute on SHCO's transformation initiatives and expand its EBITDA margins, the offer could prove to be a prudent exit for shareholders.

Final Verdict: The $9.00-per-share offer is neither a clear discount nor a strategic misstep. It represents a middle ground—a valuation that acknowledges SHCO's current performance while hedging against the uncertainties of public market expectations. For investors, the decision to accept or reject the offer will depend on their confidence in SHCO's ability to outperform as a public company versus the consortium's capacity to unlock value in private.