In a $2.7-billion deal that just weeks ago teetered on collapse, members-only club Soho House is back in private hands.
The struggling company closed its merger with EH Parent, an affiliate of West Hollywood private equity firm Yucaipa Cos., on Jan. 29.
Yucaipa and its founder, Soho House Executive Chairman Ron Burkle, will hold onto their stakes and maintain control of the business. A longtime fan of the company’s Sunset Boulevard location, Burkle bought a 60% stake in Soho House in 2012 and invested heavily in its geographic expansion.
Existing shareholders – including British billionaire and hospitality tycoon Richard Caring, Soho House founder Nick Jones and Goldman Sachs Alternatives – also rolled the majority of their shares. Actor-turned-investor Ashton Kutcher contributed new equity capital for the restructuring and will join the Soho House board of directors.
Soho House – founded in 1995 in London as a gathering spot for leaders in the media, arts and fashion industries – today counts more than 200,000 members across 46 locations worldwide. Annual membership dues range from roughly $2,000 for single-club access to $6,000 for all-club privileges.
Despite strong membership revenue, Soho House had reported nothing but net losses in its 30-year history until the top half of 2025, when its net income rose to $33 million. However, in the third quarter of last year, it posted a roughly $19 million loss.
The company has also not generated
positive free cash flow for a full year since going public in 2021 – one of the reasons
for the merger listed in a December letter to stockholders.
Last August, an investor group led by New York City-based MCR Hotels, the third largest hotel owner-operator in the U.S., pledged $200 million to buy outstanding shares of Soho House at $9 apiece as part of the take-private merger.
The plan hit a snag in early January when MCR told Yucaipa it couldn’t meet its equity commitment to close the deal, according to an SEC filing.
“Yucaipa and the special committee of the board of directors of the company, together with their respective advisers, are engaging with affiliates of MCR, as well as other parties, to secure the funding of the $200 million evidenced by MCR’s closing commitment,” the filing read. “While numerous options are being pursued, there can be no assurance that such efforts will be successful.”
In a scramble to close by the month’s end, the investors came up with the funds through new arrangements, including a $50 million equity commitment from Morse Ventures Inc., owned by MCR Chief Executive Tyler Morse, and an additional $50 million in equity from MCR.
The restructuring also involved upsized debt and added rollover agreements that brought down the cash needed to close the deal by $50 million, according to a Jan. 14 filing.
“MCR’s investment in Soho House represents a strategic opportunity to combine our operational expertise with one of the most distinctive brands in hospitality,” Morse said in an August statement. “Together, we are confident in our ability to deliver long-term value for members, employees and shareholders alike.”
Morse has since been appointed director of the Soho House board.
The deal, shareholders hope, will ease the financial strain and pressures that came from Soho House’s lackluster performance on the public markets. The company delisted less than five years after going public in July 2021.
By March 2024, Soho House’s (SHCO) stock had tumbled nearly 60% from its debut, rebounding only after the company announced the planned merger in August.
Shares closed at $9 on Jan. 28.
In a Jan. 29 email to members, Soho House Chief Executive Andrew Carnie called the privatization a “positive step.”
“It gives us the freedom to focus on what Soho House has always been about: looking after our members, creating Houses you enjoy spending time in, and continuing to connect members in the world’s most inspiring cities,” Carnie wrote.
