Soho House Goes Private In $2.7 Billion Deal

Iconic private-member club Soho House is going private again in a $2.7 billion deal with MCR Hotels, Apollo Global Management, founder Nick Jones, and majority-shareholder Ron Burkle.

Why It Vibes: Soho House, a membership club that caters to professional creatives, business elites, and everyone who likes to orbit those circles, has struggled on the public market. Its stock has fallen over 60% since its IPO in 2021, showing the difficulty of valuing and scaling a people-as-asset business (like Endeavor, which also went private again). But after three straight quarters of net profit, its glow may be returning.

Behind The Deal: Going private could restore the exclusivity Soho House thrives on.

• The deal, which includes $700 million in equity and debt financing from Apollo, with shareholders receiving $9 per share — an 18% premium on Friday’s close.
• Nick Jones and Ron Burkle — who has a majority stake in Soho via PE firm Yucaipa — will maintain a majority control of Soho, while some fresh blood will join the board, including actor-investor Ashton Kutcher.
• For MCR, one of America’s largest hotel owners with 150 properties, the move finally expands its international footprint through Soho House’s 46 locations worldwide.

The Future: The link up between MCR and Soho makes a lot of sense. MCR has a reputation for reviving historic buildings into upscale lodging, especially throughout NYC (which is where Soho got its start in the US), per The WSJ. Still, Soho’s rapid growth hasn’t been seamless: complaints of slipping quality have risen as membership ballooned past 200,000.

Nonetheless, its 2023 average membership-retention rate of 91.5% shows that people still enjoy the social status of hanging out at Soho… even if snagging a spot by the pool has gotten tougher.

Watch Out: We wouldn’t be surprised if the Soho House brand starts to make pop-up appearances in other MCR properties, creating “mini-houses” that offset some of the crowding at flagship locations.