When Profit Meets Pliés: The Unknown Side of Private Equity in Dance
WHAT IS A TRUST RECESSION?
Have you heard of a trust recession? It’s when there’s a decline in faith and confidence.
Not just in economic stability, but in institutions, leaders, and brands.
The trust recession is happening right now in the private dance sector.
A dark underbelly is moving in quickly, creating lasting impact that will be noticeable in the years to come.
There are a lot of opinions circulating online, so I wanted to share facts that I’ve discovered in educating myself about relevant market trends, so that, if you’d like, you can do the same.
HOW DID IT ALL START?
A few months ago, I received a call from an industry insider suggesting that I would most likely not be invited to speak at any summer dance industry events because of my blog article about private equity infiltrating dance studios.
Used to being an outlier (I did write Trash the Trophies), I was mainly surprised that (a) so many people read the blog and (b) it would cause such a disruption.
Why would this conversation be a bad thing?
Don’t we want people to know what is happening?
Aren’t multiple perspectives and angles healthy to consider and understand?
Confused but unbothered, I pushed the conversation to the back burner until I received an unrelated call from a nearby studio owner.
She asked if I’d be attending or speaking at any summer conferences or events, and I explained this controversy surrounding private equity. .
After our call, I went on with my day.
A few hours later, she called me back.
“Chasta, they called and asked me to sell my studio to them. I can’t believe this happened right after our conversation. It was Jeff Homer’s company, but it was a woman asking me to sell.”
This transaction prompted more research, which led to my discovery of HOW quickly private equity has accelerated in the dance space.
If you are involved with a private dance studio in any capacity, this is important information you’ll want to know.
WHO IS LEADING THE RACE AND PLAYING THE GAME?
Jeff Homer, Founder of Ensemble Performing Arts, is leading the rat race for acquiring all things dance. To be clear, there are a few different players/ equity groups in the game, but if we were giving out trophies, Jeff would win the overall award for hunting, gathering, and making it happen.
Ensemble Performing Arts IS a private equity affiliate presenting as “partners” to music and dance studios.
In true private equity style, Jeff Homer sold the Ensemble portfolio to Juggernaut Capital Partners.
While Ensemble Performing Arts is not a private equity firm (as Jeff often states on the dance related chat boards), make no mistake that this is private equity at work.
Their ecosystem is quickly growing, and they’ve already acquired such recognizable names as The Gold School in Massachusetts. It is important to note that Rhee Gold, another recognizable name in industry leadership, is not involved with this transaction and still represents the independent market.
(The full list of acquired studios may be found here, and Ensemble is aggressively seeking top markets, like Raleigh, NC, where I reside.)
More interesting than their acquired locations is their acquired staff and their affiliate companies:
Misty Lown and More Than Just Great Dancing
Mandy Yip and Acrobatic Arts
Teri Mangiaratti and In Sync Center of the Arts (an Ensemble acquired school)
Steve Sirico and Angela D’Valada and D’valda and Sirico Dance and Music Centre (an Ensemble acquired school)
Now, like I did, you may be putting some names and affiliations together. For example, Steve and Angela run the Dance Teacher Web Conference in Las Vegas. Last summer, More Than Just Great Dancing had an event immediately prior to it, and this year, Teri, Steve, and Angela will be presenting a pre-conference session together.
(Interesting to note, Misty’s dance studio, Misty’s Dance Unlimited, is not currently listed as an Ensemble location.)
Do you see the trends?
These industry influencers have built-in followers they’ve gained from different pockets of the dance industry. Now, they’re coming together to amplify and expand the work of Ensemble Performing Arts with a singular focus.
Is this good, or is this bad?
Or, maybe a better question is:
Is this shift aligned or misaligned with the trajectory we’d like to see in our industry?
Here are some of their pitch sessions targeted towards the dance space:
Your Next Act: How to Sell Your Studio When the Time is Right with Jeff Homer from DanceTeacherWeb
EV: Selling Your Studio When the Time is Right with Jeff Homer and Misty Lown
Here is a more candid interview with Jeff: “Art of the Roll Up: How to Buy 40 Businesses in 4 Years”
In this YouTube video, Jeff Homer transparently shares:
Jeff had to bring in dance people to sell the idea of expanding to dance because he knew he didn’t have the knowledge (1:08).
Jeff had to capture this industry before somebody else did because of the market size (1:09).
Ensemble Performing Arts will be privately held and traded to varying financial partners (this means private equity) because going public, or making shares available for purchase through a stock exchange, will be a disservice due to compliance (i.e. regulations) (1:12).
Jeff’s goal is to take a “job” and turn it into a “financial asset” (1:13).
The interviewer then says, “Is that what you tell your {music} teachers?”
Jeff laughs and responds that his job is to insulate them from that at the operating level.
Then, he adds:
“The youth enrichment space is all the rage right now…Parents will spend any amount of money on their kids and their experiences, which to our first approximation, we see to be true.” (1:14)
I want to highlight a few observations from my perspective:
The private dance studio sector is one of the few industries that is predominantly owned and operated by women.
A man is swooping in and using women, like Misty and four women recruiters, to capture these deals.
Some of the women he’s using have built their careers on empowering studio owners to be successfully operational without needing insulation.
So, I’m wondering, where did the wires get crossed?
Or, was this intentional for taking the lead in the space?
(Yes, there are other equity groups also at play like Ridgepeak, Momentum, and Rocket Youth.)
THE PAST AS A PROJECTION OF THE FUTURE
Franchising is different from private equity in that it is held to federal regulation standards. There are no regulations for private equity. Franchises you may be familiar with in the youth activities space include Tutu School and The Little Gym (even though The Little Gym is now a hybrid private equity/ franchise).
Private equity allows businesses to maintain their individual brand identity, to an extent, while being managed under a corporate umbrella.
I’m well-versed in this topic, because once upon a time, in 2021, I wrote a blog post called “Move the Needle: World of Dance Edition”, which took on the conversation surrounding franchising in dance.
To summarize, World of Dance posted this horribly offensive graphic about the dance education industry being in a post-Covid despair and full of revenue potential. I posted my thoughts about it all on a chat group, and hundreds of comments later we felt like a very united and strong industry.
In fact, we created so much consumer activism that Dance Magazine recapped the controversy with an article featuring myself and none other than Misty Lown.
A little over four years later, my position from the article has stayed the same.
I’m having the same conversations.
The other person?
She’s the President of Ensemble Performing Arts.
WHAT DOES IT ALL MEAN?
Listen, I’m finishing my 16th year as a studio owner. I get how appealing the sales pitch sounds, and I KNOW how hard dance studios work.
I also know we have tremendous worth in what we have created.
People trust their children with you.
The role of our institutions and positions are much bigger than financial assets.
This isn’t a game of Monopoly.
This is the trajectory of child development via extracurricular activities.
It’s unsettling to see our impact reduced to mathematical formulas designed to make a holding group’s portfolio wealthier, especially when two of the main pain points pitched are: payroll and health insurance.
The research of how private equity has impacted other service providing industries, like childcare, gymnastics, healthcare, and veterinary services is clear.
It doesn’t work.
It’s not lasting.
Brand quality diminishes, or disappears.
If that’s your exit strategy, maybe it is okay…
But, do we want a dance studio landscape that consists of differently named and branded businesses functioning under the same operational shells?
(take a peek at the website of acquired schools, you’ll notice the similarities)
Do we want a centralized hiring hub that places instructors in the Ensemble Ecosystem?
In one of the pitch videos, Jeff Homer specifically said they prefer studios to be in close proximity to one another so they can share staff and admin and be more easily supervised by a regional manager.
(you’ll notice all of the hiring pages are unique links that default to the same Google Form)
And, what is the role of More Than Just Great Dancing, an organization that has centralized organizational leadership for dance studios, in all of this?
These are questions that are important for us to consider.
The conversations shouldn’t be silenced; they should be embraced.
We should promote INFORMED business owners that can confidently step into their purpose, market differentiation, and full VALUE- in operation and in exit.
By silencing this information, we are doing a disservice to our industry.
WHAT’S NEXT?
Starting today, this is my commitment to stand up for those of us that are locally owned and operated.
This is a new, quickly changing dance studio ecosystem to navigate, but together, our community will help fellow studios, parents, and participants understand the varying options.
We’ve moved the needle before, and I believe we can do it again.
Are you a part of or affiliated with a locally owned and operated dance studio and are interested in continuing the conversation?
If so, I encourage you to complete this form.
I want us to stay in touch!
A Final Note
In complete, full transparency, DanceStudioPro and Dance Studio Owner Association (DSOA) are also backed by a private equity company; however, to my knowledge, they are not actively soliciting the purchase of studios/ schools.
The are also many other dance studio adjacent product providing businesses that are held by private equity. The web that is being cast is wide.
And, yes!
There are a myriad of private-equity backed conglomerates popping up in the competitive dance space, as well, which will continue to evolve. We all know myy feelings on that space have been clear for quite some time.
So, for today, my number one advice to locally owned and operated studios is to make your program revenue independent without reliance on third-party organizations, like dance competitions.
If dance competitions disappeared, would you still stand?
If private equity owned every dance studio in your surrounding market, would you still stand?
If the answer is YES, then you are prepared.
For success.
For your exit.
For your future.
I know that’s something we can all get behind.
