MULTI-UNIT
NEED TO
KNOW
or $30 million to make the deal worthwhile,
says Loyle. “We always had some pretty large
multi-unit operators out there but nobody
understood it. Now they do.”
“Franchisee deals are very small for
these guys,” says Hashim, and the opportunity costs of getting in bed with franchisees
are a factor. “They can place $200 million
deals at the drop of a hat. You have to get
to a point where it makes sense for them
to entertain smaller deals.”
Most private equity deals on the
operator side have been in the $3 million
to $15 million range, says Monroe. “In most
cases it’s been smaller players looking to
hook up with significant operators.”
Private equity firms won’t buy something with 5 units, they want large transactions in good brands that they can scale,
sales in the $30 million to $50 million
range, and/or an EBIDTA of at least $4
million to $5 million a year, says Yarkin.
“Generally, they’re looking for a decentsized transaction. If they’re a billion-dollar
fund, they won’t look at a million- or two
million-dollar deal.”
“There is a slowly increasing number of private equity shops that will look
for multi-unit franchisees rather than the
franchisor; or will look for multi-unit
franchisees alongside a franchisor,” says
Guinn. He says investors generally set two
conditions: (Ĥ