Kevin Robbins, a partner in District Capital Partners (DCP), had spent months researching an opportunity to invest in Blue Steel, Inc. (Blue Steel), one of the largest operators of Planet Fitness gyms in the country. What had started as a single franchisee investment quickly grew into something more. DCP's Investment Committee (IC) had given Robbins the green light to consider future investment in the Planet Fitness franchisee base. For DCP, Blue Steel represented the opportunity to acquire a premier franchisee of a highly successful concept with significant potential for both organic and acquisitive growth. Robbins had already met with Blue Steel's management multiple times, conducted extensive commercial diligence, and was working with third-party advisers—including consultants, accountants, and transaction lawyers—to assist DCP in its prospective execution of a transaction. His team was ready to present to the IC in great detail the key learnings from extensive due diligence, investment thesis, risks, and potential returns. Robbins was confident that the IC would support investing in the Planet Fitness franchise platform, but one outstanding issue remained: how to underwrite and price the Blue Steel business. DCP was not the only firm interested in the franchisee. Blue Steel's investment bankers were selling the company in a proverbial auction, trying to maximize the proceeds to the franchisee they represented. Only one bidder would be selected to conduct confirmatory diligence prior to signing and closing the transaction. If DCP decided to move forward with the opportunity, it needed to agree on a price and structure that was competitive against other bidders while at the same time providing the appropriate risk-adjusted returns to the fund. There are two student spreadsheets included with this case. UVA-F-2020X1 is suitable for more experienced finance students, and UVA-F-2020X2, which contains templates for the solution, is ideal for students who have less experience with the subject matter.