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Private Equity Investing In Franchise Companies
February 7, 2019 @ 8:00 am - 5:00 pm
From Fast Food to Home Care --
Identifying High-Growth Franchise Deals
Amidst Demographic & Tech Disruption
Private Equity Investing
In Franchise Companies
Americans are eating out more than ever — according to one recent study, more than one-third of adults eat fast food every day.
You’d think this behavior would make investing in restaurant franchise companies a sure bet.
Indeed, there are plenty of recent success stories, like the sale by General Atlantic and Rosser Capital of Barteca Restaurant Group to Del Frisco’s for a 10x+ EBITDA multiple. But at the same time, cautionary tales are also emerging, like PE-backed Taylor Gourmet, which recently filed for bankruptcy and said it would take the rare step of completely shuttering its brand.
As the U.S. economy appears ripe for a slowdown and tech disruption continues apace, you can find similar disconnects in other franchise company sectors —
- In healthcare, private equity firms are making consolidation plays in areas like dental practices and home healthcare services. For instance, KKR bought Heartland Dental in April, Riverside Company acquired CarePatrol via ComForCare in February, and NexPhase bought Synergy Homecare in April. Yet such bets don’t always go well – just look at PE-backed dermatology franchise DermOne, which has been closing multiple locations.
- In the fitness and beauty sector, PE firms are snapping up companies like CycleBar, Club Pilates, and Sunshine Fitness, counting on the boutique fitness craze to continue. But it’s hard to say if such specialized businesses are passing fads. There are already some instances of failures, like Drill Fitness and Lithe Method, which leaves investors to wonder what will happen in an economic downturn, which tends to hurt discretionary spending on things like gym memberships.
Scott M. Porter
Brightwood Capital Advisors LLC
Thursday, February 7, 2019
8:00am – 5:00pm
1 West 54th Street
New York, NY 10019
The key to successful slowdown-proof deals lies in having a deep understanding of the macro trends that are impacting franchising subsectors in complex ways. For instance —
- America’s growing wealth gap, which is increasing spending at some types of restaurants and hurting it at others
- Millennials’ increased spending power, which is driving everything from more specialized gym services to an expansion in food delivery options
- America’s growing senior population, which is leading to innovative new models for providing better healthcare while containing costs
- The push and pull of rising labor force costs and more automation, which are driving franchises to think quickly about how to retain good workers while keeping a lid on costs by automating or outsourcing some processes like delivery.
Three Key Reasons Why You Should Join Us
- Dive deep into franchise sub-sectors like boutique gyms, fast casual restaurants, and home healthcare to understand the impact of tech disruption, demographics, and fast-changing consumer tastes.
- Discuss how to attract top managers and retain talented workers in a tight labor market.
- Hear about successful cost management techniques private equity firms are implementing at their franchise portfolio companies.
- Which franchise company sectors and subsectors will thrive in both good and bad economies
- Franchisors versus franchisees — where does it make sense to invest?
- Why demographic changes are lifting up some restaurant subsectors and sinking others
- Whether restaurant investing is in a bubble
- The need-to-know outsourcing trends to consider before you invest in a healthcare franchise
- Whether investing in a fitness or beauty franchise in the economic cycle makes sense
- Which processes franchises are successfully automating
- The rise of convenience eating and the future of delivery
- How to find the best entrepreneurs
- How to retain the best staff while containing labor costs
- The pros and cons of investing in national versus regional or local franchises
- How firms are winning deals amid stiff competition with strategic buyers and high valuations
- The latest regulatory issues for franchises
- Best practices for handling disagreements with franchisees or concern among franchisees over ownership changes
- How to factor real estate into your deal-making
Scott Porter is a managing director at Brightwood Capital Advisors. Prior to joining Brightwood, Scott was a partner at Uni-World Capital, a lower-middle market buyout fund, and before that he worked with Brightwood co-founder Sengal Selassie as a partner at Cowen Capital Partners, where he spent nine years in a capacity similar to his role at Uni-World.
While at Cowen, Scott was instrumental in assisting the company in a number of business development activities that included the company’s spin-out from Société Générale and subsequent IPO, the creation of a $500 million healthcare-focused private equity fund, and the acquisition of an Asian boutique investment bank.
He started his career as a member of Chase Securities High Yield Corporate Finance Group, where he executed over $3.5 billion in lead-managed and $7.0 billion in co-managed transactions in the media, telecommunication, healthcare, chemical, consumer products, manufacturing, and service industries. He earned a BA from SUNY Binghamton University.
Recent Middle-Market Franchising Deals
- Three private equity firms — MPK Equity Partners, AHR Growth Partners, and PNC Riverarch Capital — acquired a majority stake in Sola Salon Studios, a hair salon franchisor.
- Apax Partners acquired Authority Brands, the parent company of The Cleaning Authority and Homewatch CareGivers franchisors, from PNC Riverarch Capital. The company subsequently did an add-on, buying America’s Swimming Pool Company, a swimming pool service franchisor.
- Xponential Fitness, a portfolio company of Snapdragon Capital, acquired barre franchisor Pure Barre.
- Roark Capital’s Inspire Brands added Sonic to its portfolio of franchised eateries, which also includes Arby’s and Buffalo Wild Wings.
- Trilantic North America took a majority stake in Taymax, one of the largest Planet Fitness franchisees with more than 50 locations in Canada and the U.S.
- Hyde Park Ventures acquired 16 Five Guys franchises across New England, giving it 32 franchises in the region with several more in development.
- General Atlantic invested in beauty lifestyle franchisor European Wax Center.
- TSG Consumer Partners purchased a minority stake in Dutch Bros. Coffee, a drive-through coffee franchisor.
This Capital Roundtable conference in midtown, New York City, is all-business, all-targeted, all-designed to be a completely focused day of practical information and revealing insights about education companies. You’ll gain valuable insights from —
- Three informative panel discussions
- Two revealing keynote presentations
- Real-world perspectives from education company investors
- Industry outlooks from noted sector experts
- War stories and lessons learned from experienced hands
- Daniel Pianko, Co-founder & Managing Director, University Ventures
- Burt Alimansky, Chairman & CEO, The Capital Roundtable
7:30am – 4:30pm
Space at this conference is limited, so register as soon as possible to assure yourself a seat. To avoid disappointment, please contact Kristi Paris today to confirm your attendance at 212-832-7300 ext. 0 or email@example.com.
Please note that Capital Roundtable limits the number of registrants from a single firm to three.
Best Rate – Early Registration
Save $400 off the standard fee of $1,495 when you register by Friday, December 14. Just $1,095.
Save $200 of the standard fee! Register by Friday, January 4, and the fee for the conference is $1,295.
$1,495 increasing to $1,595 day of conference, space permitting.
$995 each, when you register two or more people to attend from the same company.
You can pay by credit card (using the links above or below) or by check. Mail your check and business card to: New York Business Roundtable Inc., 747 Third Avenue, Suite 200, New York, NY 10017.
Can’t attend but want to hear the program? You can buy the audio package along with the handounts.
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