Multi-Unit Franchisee, 2012 Buyers Guide

NEED TO KNOW

On the franchisee side, the stagnant market of the past 3 years has created a backlog of franchisees seeking to sell their business, whether to exit or to make a profit and taking their organization for a sale when the economy recovered. Their time is now, say experts. Multiples are rising, but not to the excessive levels of the boom years, making the current environment a potential win-win opportunity for both sellers and buyers.

A growing understanding on both sides of the buy-sell equation—private equity “getting it” about franchisees, and operators educating themselves about the private equity market—combined with the “perfect storm” of pent-up capital seeking investments and operators seeking capital for growth as the economy tilts upward for the first time since 2008—looks to make 2012 an exciting year in the multi-unit franchising arena. Here, in FAQ form, is what our ad hoc panel of experts has to say about the year ahead for multi-unit franchisees considering taking on a private equity partner, or simply selling out and heading for their favorite fishing hole, golf course, or new venture.

What is private equity?

Private equity is a “hodgepodge,”
says Harry Loyle, managing director of
Cybeck Capital Partners, and it comes in all
shapes and sizes. The simple definition, he
says, is “private money that involves equity
transactions, but under that there all kinds
of opportunities.”
“Private equity comes in a myriad of
forms, fashions, and has different criteria
important to them,” says David Stiles,
senior vice president at Trinity Capital,
which recently served as financial advisor
to multi-unit firm Breads of the World in
its sale of 20 Panera Bread restaurants in
Ohio to Covelli Enterprises. “There are
private equity interests out there to match
whatever you require.” And it can take on
lots of different forms, depending on the
agenda of the multi-unit franchisee.