Topgolf Callaway Brands sold the majority of the Topgolf business to Leonard Green & Partners L.P. at a steep discount from what the company had paid for it. Some analysts saw the move as helping to simplify the business and allowing management to concentrate on its core golf equipment platform, but others wanted Callaway to sell the entire Topgolf stake.
On an analyst call, Chip Brewer, president and CEO of Topgolf Callaway, said the sale of Topgolf to private-equity giant Leonard Green & Partners, L.P. will help the entertainment-centric golf business reach its “full potential,” while allowing the remaining Callaway business to gain “greater strategic focus” in driving growth it its core competencies in golf equipment, as well as in active lifestyle apparel.
Said Brewer, “Post-transaction, our remaining brand portfolio will consist of Callaway, Odyssey, TravisMathew, and Ogio, which, together, generated over $2.0 billion in revenue over the last twelve months through Q3 2025. With the proceeds from this sale, we will be well capitalized, enabling us to continue to reinvest in our core businesses, while also significantly reducing our debt and returning meaningful capital to our shareholders.”
Los Angeles-based Leonard Green, which holds a minority stake in Topgolf, acquires a 60 percent stake in Topgolf, with the deal also including the Topracer driving range technology platform.
Upon completion of the transaction, Topgolf Callaway will change to Callaway Golf, hold a 40 percent stake in Topgolf, and receive net proceeds of approximately $770 million at closing, subject to standard purchase price adjustments. Callaway will be in its marketing agreements with Topgolf, including supplying the TravisMathew brand to staff and serving as the exclusive equipment provider to Topgolf.
Brewer said, “We believe this structure will provide us with significant upside as Topgolf continues on its positive trajectory.”
The sale comes as Topgolf Callaway last week reported third-quarter results that topped guidance, as Topgolf’s same-venue sales turned positive for the first time in two years, with the Golf Equipment segment also topping plan.
The transaction values Topgolf at approximately $1.1 billion, well below the 2 billion valuation Topgolf earned in 2021 when Callaway Golf Co. acquired the remaining stake in Topgolf it didn’t own to form Topgolf Callaway Brands.
Last September, Topgolf Callaway announced its intention to separate its business into two independent companies, as sales at Topgolf slowed and investors turned bearish on the merger.
Plans to spin off Topgolf in the back half of the year were expected to be delayed after the unit’s Chief Executive Officer took a role at Harley-Davidson, Inc.
On Thursday, shares were trading down 47 cents, or 4.3 percent, to $10.41. The stock had risen 6.5 percent on Friday after the Wall Street Journal reported on the potential sale.
Shares had reached $37.75 in June 2021, as investors were initially enthusiastic about the merger.
On the analyst call Tuesday, Brewer said that as the company considered various alternatives for Topgolf, including a potential spin-off, it received “significant interest” from multiple parties. He added, “After a thorough evaluation process, we concluded – along with our board and advisors – that this sale was the best outcome for our shareholders, as well as our employees and other stakeholders.”
He pointed to the progress Topgolf has made since the merger was completed in 2021, including nearly doubling the number of Topgolf venues to create a “truly national brand.”
Topgolf also has undergone some “significant technology upgrades, including adding Toptracer to all venues, developing an online reservation system, and creating new games — “all driving strongly positive reaction from Topgolf players,” according to Brewer.
From a financial perspective, venue-level margins have increased approximately 400 basis points and Topgolf became free cash flow positive on a standalone company basis in 2023 and continues to be free cash flow positive today.
He said Leonard Green “has a long and proven track record of success in helping high-growth companies like Topgolf reach their full potential. We are confident that Leonard Green is an ideal partner for Topgolf’s next chapter, and we are excited to start this new journey together.”
Leonard Green’s current investments in the active lifestyle space include Life Time Group Holdings, Authentic Brands Group, and Pure Gym in the U.K. Past investments include J. Crew, Lucky Brand, SoulCycle, and Equinox.
Brewer said the transaction will enable the remaining Callaway business to continue reinvesting in its operations, paying down debt, and exploring stock repurchases or other methods to drive shareholder value. He said, “We will work with our board of directors to determine the specifics of this capital allocation strategy, as well as the optimal capital structure for our ongoing business.”
The acquisition remains subject to regulatory approvals and customary conditions. Leonard Green has already secured the necessary financial commitments.
Brewer said, “We are fully committed to collaborating with Leonard Green to further accelerate Topgolf’s growth and enhance its financial success.”
Callaway will have a two-year lock-up agreement under which the company cannot sell its remaining 40 percent stake in Topgolf unless it obtains Leonard Green’s permission.
Among analysts, Jefferies’ Randy Konik said the deal was a win for Topgolf Callaway, driving business simplification, sharpening focus on Callaway’s core golf equipment platform, and eliminating valuation and capital-intensity overhangs. In a note, Konik argued that strategic clarity, reinforced by a pure-play golf strategy and a rebrand to Callaway, positions Topgolf Callaway to fully capitalize on strong tailwinds in the golf industry.
In a note prior to the analyst call, however, Greg Miller, an analyst at Truist Securities, questioned why Callaway had to keep a 40 percent stake in Topgolf rather than selling it outright to further simplify the investment story. Miller, who has a “buy” rating at a $12 price target, felt the weakness in Topgolf Callaway’s stock price on Tuesday may be because of the continued exposure to Topgolf.
Arpiné Kocharyan estimated that, after adjusting Topgolf’s EBITDA for financed lease expenses, Leonard Green paid 6x EBITDA for Topgolf, or 9x including landlord financing obligations as part of the debt exiting Topgolf from Callaway’s balance sheet.
Kocharyan said on a stand-alone basis, the remaining Callaway business’ equity value should be valued at around $11, assuming it fetches a valuation close to Titleist parent’s Acushnet’s long-term EV [enterprise value] /EBITDA multiple of 11x.
Kocharyan, who reiterated his “neutral” rating on Topgolf Callaway at $10 price target, said that while he has long felt “separating the two businesses could result in a cleaner story for each, given Topgolf’s more challenging same-venue store sales had been an overhang relative to the core golf business that has delivered more resilient growth post Covid,” investors will need to see a higher growth profit from the remaining Callaway business to assign the stock a multiple similar to Acushnet’s.
At Morgan Stanley, Simeon Gutman likewise believes Topgolf Callaway’s significantly lower multiple compared to Acushnet reflects the firm’s continued involvement in Topgolf going forward, as opposed to the “clean separation” investors expected. He wrote, “While Topgolf’s SVS, operating profitability and cash flows have improved in recent quarters, the business still carries a substantial liability load: $1.3bn in ‘deemed lease financing’ obligations, $1.4bn in operating leases, and $0.3bn in financing leases, as of the end of 3Q25. While these liabilities will no longer be consolidated in RemainCo’s balance sheet once the transaction is completed (and
we understand that Topgolf creditors would have, in principle, no direct legal recourse against RemainCo), RemainCo’s continued ownership of a 40 percent equity stake in Topgolf keeps a significant link between both businesses.”
Gutman reiterated his “Equal Weight” rating at an $11 price target.
Image courtesy Topgolf
