Determine The Brand You Want And Then Be Open To Deals
You've done your research and have decided on a brand (or two) that you would like to add to your portfolio. Now it's time to do everything you can to strategically increase the probability of an efficient and successful process, says Carty Davis, founding partner with C Squared Advisors, a boutique investment bank.
Davis has managed hundreds of financing, merger and acquisition, refranchising, and restructuring transactions over the past 35 years as a lender, investment banker, and financial advisor in the multi-unit franchising space. He encourages franchise owners and management teams to look for potential deal opportunities anywhere and everywhere possible to get an idea of valuation parameters. He also recommends having an active dialog with franchise execs.
Here's more from Davis on how to approach a brand (or brands) after you have determined it's the one you want to expand with:
- Cast a Wide Net
Once you have narrowed the list of brands you wish to focus on, look for potential deal opportunities anywhere and everywhere possible to get an idea of valuation parameters. Having active dialog with the franchisor is the best advice. In some instances, distressed or challenged situations may present opportunities for new groups as these situations often require speed, and new franchisees can be positioned as an improvement over the status quo to the franchisor. Try to find situations and transactions that have been awarded and position your team as a backup buyer. A planned deal could fall apart at any time for a variety of reasons. Try to identify partner buyout or replacement investor opportunities. Cast as wide a net as possible by talking to banks and financial institutions that lend to the brand, attorneys that are active with the brand, and multiple advisory firms. Generally, a handful of advisory firms manage the active deal flow with most brands.
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