Multi-Unit Franchisee Magazine Issue IV, 2016 - Page 73

go to the supermarket without knowing how they planned on paying . Not everyone applies this logic when they seek restaurant acquisitions . Buyers should establish strong relationships with various financing sources before they even begin looking at buy-side opportunities , so when the right deal comes around they aren ’ t scrambling to secure the acquisition capital . Further , a bid that details the buyer ’ s proposed debt / equity structure , with a signed commitment from a capital provider , is substantially more compelling to a seller than a bid lacking these things . Do have financing options in place . Don ’ t wait for a sell-side advisor to tell you your bid was interesting , but their client chose the buyer with more certainty around funding .

• Know the franchisor . Whether you are an existing franchisee or not , it is vital to know the franchisor you will be dealing with . What is their current growth strategy ? What kind of franchisee do they prefer ? Are they trying to bring new blood into the system or bulk up the operating platforms of existing franchisees ? This last question is crucial , especially if you are looking to enter a new brand . Before pursuing a specific opportunity , meet with the franchisor to discuss their approval process and present your operating plan and team . Transactions move far more easily and quickly when a buyer is preapproved and in good standing with the franchisor . Do establish this relationship early . Don ’ t wait until the bid process is complete to learn that the franchisor doesn ’ t view you as a viable buyer .
• Be aggressive . In today ’ s market , restaurant acquisitions are highly attractive , making for an exceedingly competitive environment . Buyers must be aggressive . This is especially true when the transaction is the buyer ’ s initial investment in a brand . Existing franchisees may have built-in advantages ( e . g ., predicted synergies that allow them to make a higher bid , and / or having strong ties with the franchisor ). New entrants be wary : you may have to pay a premium to tip that first deal in your favor . Buyers must always be prepared to move quickly as delays often cause sellers to become discouraged or reexamine the sale . Another way to anger a seller and potentially lose a deal is to delay the purchase process in
an attempt to re-trade at a lower price . If you ’ re actively looking to buy and you come across the right deal , do pursue it aggressively . Don ’ t dawdle and miss your opportunity .
Do ’ s and don ’ ts for all
• Have proper advisors . Whether buyer or seller , engaging experienced , industry-specific investment advisors and transaction-specific legal and tax counsel is paramount to your success . Acquisitions and divestitures alike have many moving pieces that can seem overwhelming without proper counsel . To achieve the utmost success , enlist the help of people who know how to plan , position , and execute transactions to your benefit . The resources required to navigate the intricacies of a multi-unit restaurant transaction are considerable . Do hire professionals with proven insight and transaction expertise in the industry ’ s inner workings . Don ’ t rely solely on your everyday business advisors or attorneys .
• Be realistic . This is possibly the most important concept in successfully completing a transaction . Both sides must be realistic about their expectations . If a seller is stuck on an unrealistically high purchase price or multiple , finding the right buyer will be a far greater challenge . On the flip side , it isn ’ t realistic for a buyer to propose a purchase price based on a 2009 transaction multiple . The most realistic thing for both parties is to recognize that every transaction is a constantly moving , two-way street . If you want a deal to be successful , the negotiated terms must be satisfactory to everyone involved . Do view transactions in an objective and realistic manner . Don ’ t rely on subjective inclinations or conjecture .
Dean Zuccarello is CEO and founder of The Cypress Group , a privately owned investment bank and advisory services firm focused exclusively on the multi-unit and franchise business for 25 years . He has more than 35 years of financial and transactional experience in mergers , acquisitions , divestitures , strategic planning , and financing in the restaurant industry . Contact him at 303-680-4141 or dzuccarello @ cypressgroup . biz .

AdIndex

ADVERTISER PAGE
2017 MUFC
IBC
7-Eleven , Inc .
17
Aaron ' s , Inc .
7
American Family Care / Doctors Express
19
Arby ' s Restaurant Group , Inc .
9
Batteries Plus Bulbs
41
Big O Tires
35
Blue Coast Burrito
59
Broken Yolk Cafe
43
Capriotti ' s Sandwich Shop
43
Captain D ' s
41
Checkers
21
Club Pilates
23
Del Taco
61
Denny ' s
3
Dunkin ' Brands
45
Earl of Sandwich
63
Entrepreneur Media , Inc .
65
Farmer Boys Food Inc
45
Feed America
63
Firehouse Subs
31
FRANdata Corporation
69
Fuddruckers Inc .
63
GNC
39
Golden Corral Buffet & Grill
47
Huddle House , Inc .
61
Hungry Howie ' s Pizza
49
International Franchise Association
67
Liberty Tax Service
25
Lift Brands
27
Marco ' s Pizza
59
MassageLuXe
5
McAlister ' s Deli
Custom Insert
Miami Grill
37
Midas International Corporation
37
Moe ' s Southwest Grill
11
Nekter
Back Cover
OXXO Care Cleaners
29
Perkins Restaurant & Bakery
59
Rent-A-Center
49
Save-A-Lot Food Stores
13
Schlotzsky ' s Bakery & Cafe
15
Scooter ' s Coffee & Yogurt
55
Shakey ' s USA , Inc .
55
SPEEDEE OIL CHANGE & TUNE-UP
39
Steak n ' Shake
33
Taco Bueno
IFC
The Coffee Bean & Tea Leaf
35
Tide Dry Cleaners
61
Wireless Zone
2
ZIPS Dry Cleaners
47
MULTI-UNIT FRANCHISEE ISSUE IV , 2016 71
AdIndex ADVERTISER PAGE go to the supermarket without knowing how they planned on paying. Not everyone applies this logic when they seek restaurant acquisitions. Buyers should establish strong relationships with various financing sources before they even begin looking at buy-side opportunities, so when the right deal comes around they aren’t scrambling to secure the acquisition capital. Further, a bid that details the buyer’s proposed debt/equity structure, with a signed commitment from a capital provider, is substantially more compelling to a seller than a bid lacking these things. Do have financing options in place. Don’t wait for a sell-side advisor to tell you your bid was interesting, but their client chose the buyer with more certainty around funding. •Know the franchisor. Whether you are an existing franchisee or not, it is vital to know the franchisor you will be dealing with. What is their current growth strategy? What kind of franchisee do they prefer? Are they trying to bring new blood into the system or bulk up the operating platforms of existing franchisees? This last question is crucial, especially if you are looking to enter a new brand. Before pursuing a specific opportunity, meet with the franchisor to discuss their approval process and present your operating plan and team. Transactions move far more easily and quickly when a buyer is preapproved and in good standing with the franchisor. Do establish this relationship early. Don’t wait until the bid process is complete to learn that the franchisor doesn’t view you as a viable buyer. • Be aggressive. In today’s market, restaurant acquisitions are highly attractive, making for an exceedingly competitive environment. Buyers must be aggressive. This is especially true when the transaction is the buyer’s initial investment in a brand. Existing franchisees may have built-in advantages (e.g., predicted synergies that allow them to make a higher bid, and/or having strong ties with the franchisor). New entrants be wary: you may have to pay a premium to tip that first deal in your favor. Buyers must always be prepared to move quickly as delays often cause sellers to become discouraged or reexamine the sale. Another way to anger a seller and potentially lose a deal is to delay the purchase process in an attempt to re-trade at a lower price. If you’re actively looking to buy and you come across the right deal, do pursue it aggressively. Don’t dawdle and miss your opportunity. Do’s and don’ts for all • Have proper advisors. Whether buyer or seller, e Y[^\Y[Y [\K\XYX[\Y[Y\ܜ˜[[X[ۋ\XYXY[[^[[\\[[[[\X\˂X]Z\][ۜ[]\]\\[ZH]BX[H[ݚ[YX\][Y[Hݙ\[Z[]]\[[ ˜XY]HH][X\[\B[و[Hۛ[][ۋ[^X]H[X[ۜž[\[Y] H\\\\]Z\Y›]Y]HH[XXY\وH][K][]\]\[[X[ۈ\HۜY\XK\Hٙ\[ۘ[]ݙ[[Y[[X[ۈ^\\H[H[\x&\š[\ܚ[ˈ۸&][H[Hۈ[\]\Y^H\[\Y\ܜ܈]ܛ^\˂(HX[\Xˈ\\XHB[[\ܝ[ۘ\[X\ٝ[B\][H[X[ۋY\]\HX[\XX]Z\^X][ۜˈYB[\\Xۈ[[X[\X[HY\\HXH܈][\K[[BY^Y\[HH\ܙX]\[[KۈH\YK]\۸&]X[\X™܈H^Y\HH\\HXB\YۈH H[X[ۈ][\KH[X[\X[܈\Y\\Xۚ^H]]\H[X[ۂ\Hۜ[H[ݚ[]^HY] Y[H[HX[HX\ٝ[ BYX]Y\\]\H]\٘XܞB]\[ۙH[Y Y][X[ۜ[[ؚX]H[X[\XX[\۸&][HۈXX]H[[][ۜ܂ۚX\KX[X\[\S˜[[\وH\\‘ܛ\ H]][HۙY[\Y[[[Y\ܞH\X\\H\Y^\][HۈH][K][][[\H\[\܈ BYX\ˈH\[ܙH[ HYX\و[[X[[[X[ۘ[^\Y[H[Y\\X]Z\][ۜ]\]\\]YX[[[[[[[H\]\[[\K۝X[H] M M M H܈X\[\\ܛ\ ^B]Y^]]YY\ MJK[ B MUQBP‚Q[][[˂BM‚X\ۉ[˂B‚[Y\X[[Z[H\H ܜ^\B\I\]\[ܛ\ [˂BNBB]\Y\\[B BY\\BBYH\\]BNB[[YBB ‚\[I[XB ‚\Z[ B BX\LBX[]\B‚[XBB[IL‘[[[B BX\و[XB‚[\[]\YYXK[˂BB\Y\\[B BYY[Y\XBB‚\Z\HXBBS]Hܜܘ][ۂBBYX\[˂B‚ӐLB[ܜ[Y] ܚ[B ‚YH\K[˂BB[ܞHYI^BBB[\][ۘ[[\H\X][ۂB‚X\H^\XBBBY[B‚X\^BBNBX\YSVBMBX[\\[BB\H[\ZX[ZHܚ[B‚ZY\[\][ۘ[ܜܘ][ۂB‚[I]\ܚ[BZ\BLBXݙ\\HX[\BB\[\]\[ Z\BBNB[ PKP[\MB]KPKSܙ\BL‚IZ\H YBBMB\ٙYH [\BMBZ^ITK[˂BMBQQQHSSH SKUTBBXZZBBXY[B’Q‚HٙYHX[ XHXYBBYHHX[\BB\[\ۙBBTHX[\B ‚USKUSUSTQHTHHU MBL ͋M NNB