XP Factory (LSE:XPF) has agreed to sell the entire share capital of BBB Franchise, its Boom Battle Bar business, to F.O Twenty-Four for total consideration of up to £11m.
The AIM-listed experiential leisure group will receive £5m in cash on completion, used to cut bank net debt and fund working capital and growth, with up to £6m more available through sales and EBITDA earn-outs over three years.
Boom generated revenue of £42.4m and adjusted pre-IFRS 16 EBITDA before central costs of £7.4m in the year to 29 March, operating 24 owner-operated and five franchise sites across the UK; the implied valuation is up to 4.5 times trailing adjusted EBITDA after an allocation of central costs, against a net book value of approximately £21.3m.
The competitive socialising market it operates in saw like-for-like revenue decline roughly 9% during FY26, with the trend continuing into FY27, compounded by higher labour costs from government-mandated wage increases.
The buyer is backed by Frasers Group and includes Boom's original founders.
"Escape Hunt has all of our capital and all of our focus," said chairman James van den Bergh, adding that the brand's mature UK sites return an average of 51% on invested capital.
Following completion, XP Factory is targeting at least 28 UK-owned Escape Hunt sites by the end of FY27, up from 24 in FY26, with run-rate sales of at least £18.5m and central costs cut to no more than £4m from £8.9m.
By the end of FY31, the group is targeting at least 50 UK sites, with long-term potential of 100-plus, sales of at least £30m, EBITDA of at least £8m and net debt held below 1.5 times EBITDA.
Cash proceeds are expected to reduce net debt to approximately £3m, and the group's HSBC revolving credit facility has been right-sized from £20m to £10m to match the standalone Escape Hunt plan.
Escape Hunt and Boom will continue operating alongside each other at seven co-located sites under existing lease arrangements.
The disposal completed with signing on 28 September.