Multi-Unit Franchisee Magazine Issue II, 2011 | Page 64

PrIvAte equItY

Choose Your Partner Well

I

draw that,” says Ikirt, adding that operators should at
least consider private equity as a source for growth
capital “in these times when banks aren’t lending.
I’m also not so sure if the banks were lending that I
wouldn’t consider an equity partner.”

n July 2009, John Ikirt signed on as a ComforCare
Senior Services franchisee in Dayton, Ohio. He
did it with the advice and funding of a private
use your equity wisely
investment company with a unique approach:
Since one of the most challenging decisions an
investing for the long term as a 50/50 partner, rather
entrepreneur has in their lifetime is capital construction
than the typical 80/20 deal with an exit written in
(what kind, what terms, when), Loyle says he has a
stone some 5 to 7 years later.
“little speech” he gives to potential clients. “You must
Ikirt approached Harry Loyle, managing director
be sure you’re expending that equity at the right point
of Cybeck Capital Partners in Dayton. “Banks weren’t
in your development. If you can accomplish your
really lending money unless you had collateral, and
goals and aspirations without private equity, don’t do
this is a service industry so Harry was an option.”
Ikirt, who spent 16 years in sales management with it; don’t spend your valuable currency and interject
another person into your company.”
Johnson & Johnson, saw the homecare business as a
The biggest point in any private equity transaction,
good fit after he left J&J voluntarily. “On the pharma
says Loyle, is to “understand that equity is your most
side, there was lot of right-sizing and downsizing
valuable currency. So do your due diligence and be
going on, I traveled a lot, which just got old, and
sure the partner you’re choosing is consistent with your
I always wanted to be my own boss and business
values and aspirations.”
owner.”
In a typical private equity transaction, he says, the
As it turned out, Ikirt already knew Loyle through
private equity firm picks up 80 percent
networking, and was spared the
and the franchisee keeps 20 percent.
time, uncertainty, and due diligence
“Our transactions are 50/50 equity, we
of searching for a private source of
structure a true partnership,” says Loyle.
funding to start his business. “If you do
“Because of that, we spend a lot more
seek outside help like I did, interview
time understanding the individual than
people so you find somebody who’s
the transaction.”
a good match and who understands
For Loyle, it’s all about who you are
what you’re trying to accomplish,” says
partnering with. “You have to be very
Ikirt. “I think it’s important to interview
comfortable that you have mutual values
different people. I didn’t have to do that,
and culture.” If you do, he says, “Twenty
I was very fortunate, and we were a
percent of a $100 million company
good fit for each other.”
is better than 100 percent of a $1
And in terms of the operations,
million company.” Bringing in an equity
being a 50 percent stakeholder, says
—John Ikirt
partner, he says, “is not inherently bad,
Ikirt, “I still have control.” But beyond
but it is inherently challenging.” One of
that is the relationship. “The nice
the most successful deals he’s done took a company
thing is that it’s not just I can find capital if I need
from $200,000 in revenue to $15 million in 5 years.
it, but I have somebody who has really extensive
For Ikirt and Loyle, the partnership seems to
business experience,” says Ikirt. “I think it’s a unique
be working well, with the business growing from
relation ͡