Multi-Unit Franchisee Magazine Issue II, 2013 | Page 81

franchisings, to bolster your current brand.
Look at the acquisition of a new brand.
Jump-start organic growth through development. Repurchase underperforming
franchisees or inferior operators. But before you start, make sure you are properly
prepared in terms of your credit request:
clearly show use of proceeds, outline
growth expectations through projections,
specify timing needs for funds, address a
revolver if needed for remodels or new
unit development, and be aggressive on
your capital requirements.
• Exit strategy. If your company has
been contemplating an exit, are you aware
that the timing could not be better? Buyers
are sourcing favorable financing, which
increases their motivation and ability to
close on transactions. Private equity firms
have pent-up capital to deploy, creating
demand for performing companies. And
lenders are facing competition, driving
down the cost of borrowing, thus exerting
upward pressure on valuation multiples.
• Optimal capitalization strategy.

If your company
has been
contemplating
an exit, are you
aware that the
timing could not
be better?
An operating company should periodically check to see if its capital structure is
optimized. Are your contract rates competitive with current interest rates? Have
you quantified pre-payment amounts,
swap breakage costs, make-whole provisions, and defeasance? Do you know your
breakeven to refinance? How about your
company’s debt capacity? There may be
enough to tap and deploy the capital to
generate returns from your operations. In
any case, the timing could not be better
to consider a recapitalization.

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Conclusion
The franchise finance environment created by this perfect storm of events is as
common as a snowstorm in Miami. We
won’t see this again for a long time, and
this window will not be open for long.
Take advantage of this to improve your
financial position by acting now. You’ll
look back on this time and be pleased
that you did.
Dean Zuccarello, CEO
and founder of The Cypress
Group, has more than 30
years of financial and transactional experience in mergers, acquisitions, divestitures,
strategic planning, and financing in the restaurant industry. The
Cypress Group is a privately owned investment bank