A strategic separation that could benefit both companies and the broader game
Myrtle Beach, SC – November 20, 2025
On November 18, 2025, Topgolf Callaway Brands (ticker: MODG) announced it is selling a 60% majority interest in Topgolf to private equity firm Leonard Green & Partners for an enterprise value of $1.1 billion. Callaway will retain a 40% minority stake and expects to receive approximately $770 million in net cash proceeds when the deal closes (targeted for the first quarter of 2026).
The Key Numbers at a Glance
- Original 2021 merger valuation: ~$2.6 billion enterprise value (all-stock)
- Current implied 100% valuation of Topgolf: ~$1.83 billion
- Callaway’s remaining 40% stake: valued at roughly $730–750 million at the deal price
- Total value Callaway realizes: ~$1.5 billion (cash received + retained equity)
Why the Separation Makes Sense
CEO Chip Brewer called it “strategic simplification,” and the reasoning is straightforward: the two businesses operate with very different economics.
- Callaway Golf (clubs, balls, apparel, TravisMathew): high gross margins (45–50%+), recurring demand, strong pricing power.
- Topgolf venues: lower gross margins, capital-intensive expansion, and revenue that is highly sensitive to discretionary consumer spending.
Since the 2021 merger, investors have consistently applied a “conglomerate discount” to the combined company. The separation removes that discount and lets each business play to its strengths.
What Callaway Gets
- A significantly cleaner balance sheet (leverage expected to drop below 2×)
- Capital to resume share repurchases and potentially initiate a dividend
- A renewed focus as a pure-play golf equipment leader at a time when on-course participation remains strong
What Topgolf Gets Under Private Equity
Leonard Green & Partners has a proven track record with consumer and leisure brands. The widely expected roadmap includes:
- Dramatically slowing new venue openings (capex expected to drop 60–70% from recent levels)
- Shifting international growth to franchising and licensing (lower capital, higher margins)
- Driving profitability from the existing 100+ locations through labor/menu optimization, dynamic pricing, and deeper membership/corporate penetration
- Targeting mid-20% EBITDA margins within 2–3 years (versus mid-teens today)
- Positioning the company for a future exit — another sale or possible IPO in 4–6 years at a higher valuation
Market Reaction
Since the announcement, MODG stock is up approximately 15% and trading at 12-month highs. Wall Street has responded positively, with upgraded price targets from Jefferies ($18), Truist ($17), Roth ($16), and others calling it the “best possible outcome” for Callaway shareholders.
The Bigger Picture for Golf
This transaction is not a signal that off-course entertainment is fading. It simply acknowledges that Topgolf is moving from a high-growth, high-capex phase into a more mature, cash-flow-focused phase — a phase that is often better suited to private ownership.
For the broader golf industry — on-course play, travel, equipment, and media — the separation is actually healthy. Callaway returns to its high-margin roots, while Topgolf gains an owner laser-focused on making the venues more profitable and, importantly, more accessible for repeat visits.
We’ll be tracking both companies closely in 2026 and beyond. One thing remains clear: golf participation, both on and off the course, is still in a multi-year growth cycle. This deal just draws a cleaner line between two very different ways to grow it.
What do you think this means for the future of off-course golf entertainment?
