Mindbody to Acquire Payal Kadakia’s Billion Dollar Company ClassPass

ClassPass gives consumers access to a variety of professionals in the health and wellness space. With the company's all-stock merger with Mindbody, its services will be taken to new heights. The two parties agreed to a merger on Oct. 13. Mindbody secured a $500 million investment for the merger deal.

ClassPass allows users to choose from fitness studios, trainers, instructors, spas, and other related services. It gives businesses and professionals the ability to promote and offer their services. You can book a workout at a gym, book a spa treatment, and reserve a yoga class all on the same day. While Mindbody focuses on the B2B side of wellness software, the two companies have many similarities that can complement each other.

An all-stock merger is when the acquiring company uses its shares as payment to conduct the acquisition. So, instead of the acquiring company paying the target company cash, the target company is just paid in shares of the acquiring company. This can be useful if the acquiring company wants to use cash funds for other business purposes, or maybe the company doesn't have enough cash funds to pay the target.

In the case of the Mindbody and ClassPass merger, it’s possible that Mindbody had enough cash funds to acquire ClassPass, but it felt that an all-stock merger was the better route.

Mindbody was acquired by Vista Equity Partners in 2018 in an all-cash deal. The deal was worth $1.9 billion and was finalized in February 2019. Vista Equity Partners is one of the biggest investment firms in the U.S. It has invested heavily ted in companies that revolve around software and technology-based platforms. The firm states that it has over $81 billion worth of assets under management.

Kadakia founded ClassPass and served as the CEO from the company’s initial launch in 2011 until 2017. In 2017, the entrepreneur stepped down as the CEO and took on more of an executive chairman role. She promoted Fritz Lanman to the CEO position. Lanman was one of the company’s first executives and investors. He helped lead various seed fundings throughout the years.

Lanman is an angel investor who has helped develop many companies into the global giants they are today. Some companies he was an angel investor in include Pinterest, Wish, Square, and more. Before having a well-versed investment portfolio, the Yale graduate was a Director at Microsoft. He focused on mergers and acquisitions evaluations and strategy projects for the company.

Kadakia had a background in fitness. She started taking Indian dance lessons at the age of three, and performed Indian folk dances when she was five. She graduated from the Massachusetts Institute of Technology in 2005 with a degree in Management Science.

A few years after graduating, the ClassPass founder was an associate director at Warner Music Group, where she specialized in digital strategy and business development. Now, Kadakia will step away from ClassPass, leaving it in the hands of Lanman and other executives. Lanman will become the president of the ClassPass and Mindbody Marketplace.

The businesswoman has a net worth of $60 million, according to Wealthy Persons. It isn't clear what her net worth is after the merger deal. In 2020, ClassPass had a Series E funding round that reportedly raised $285 million, which gave the company a valuation of over $1 billion.