PE Profit Ladder Articles
Level Up! Podcast with Nick Lopez: Navigating the Competitive Surge: Revolutionizing Franchise Success
The founder of Emergent Growth Advisors, shares how private equity is reshaping the franchise landscape by driving unprecedented success and innovation. With rising competition and heightened expectations, PE-backed franchises are unlocking new levels of profitability and expansion. Listen in on how this investment surge is not only transforming brands but also creating exciting opportunities for franchisees and vendors alike.
PE Squeeze: Investor Pressure to Exit & Return Funds
European point of view from recent private equity conference at covered by Financial Times, but themes mirror much of the squeeze we're seeing here in the US: 1) Drop in small PE funds; 2) Flight to large funds (mega-funds heading toward record fundraising year); 3) Increasing investor pressure to create exits & return funds; 4) Longer holds have been necessary recently to drive ROI; 5) Tougher for small generalist PE firms, specialists doing fine; 6) PE firms globally are sitting on record 28,000 unsold businesses (source: Bain) ***** Franchise spin: 1) Coming into 2025 it's setting up to be an active trading year; 2) Good exit may outweigh optimal exit for some PE-to-PE trades; 3) Extreme pressure to hit growth business case; 4) Great operators & franchisees have negotiating power in recruiting discussions; 5) High quality franchise businesses still sought after acquisition targets; 6) When does the "music stop" on PE-to-PE retrades? At some point, there may be no logical PE buyer and some assets may need to find a long hold family office to get an exit if IPO or reverse SPAC aren't options...
Half of Those Searching For a Business To Buy Don't "Need" to Buy
According to Franchise Insights, 43% of seekers are currently employed full-time (down from a record 62% in June) and another 14% are existing business owners looking for another business to buy. Read that sentence again. More than HALF of people looking to buy a business today don't "need" to do so. Review your franchise website and unit level economics. Does your franchise opportunity description speak to people who are already gainfully employed or own another business? Why should they investigate YOUR franchise?
Will Inspire Brands Pursue IPO?
It has long been expected that Roark would take Inspire Brands public. Will this happen soon? The brand has recently been aggressive about opening new markets and also creative co-branding / co-unit opportunities within existing stores.
Playa Bowls Acquired by Sycamore Partners
Playa Bowls was just acquired by Sycamore. Surprise? No. Playa brought in several new investors in July 2021. At that point the company was valued at $67.8M and had >100 units. It continued to grow, adding 150 units. It's the PE Profit Ladder at work. Now it's time to bring in an investor with deep retail experience to drive the next wave of expansion. A 3-year hold for Tamarix Equity Partners, almost to the month.
Subway closes in on second large securitization: $2.3 Billion
If this latest Subway securitization closes at $2.3 billion it would be the 4th largest this year according to Yahoo Finance. It's been a particularly busy year for whole business securitization. The independent franchisee association should continue to stay engaged. At least some of this cash should be reinvested in the business, which continues to face headwinds, not solely used to repay investors and the PE sponsor.
FTC's New Franchise Guidance Shows Need For Effective Change Management
New FTC franchise guidance will primarily impact systems with broken or non-existent change management processes. But the entire franchise "neighborhood" can be tainted by association when a few systems don't handle change well. Their mess reflects poorly on the franchise model & attracts regulator attention.
Franchise U! Big Money in Franchising with University of Louisville, College of Business & YUM! Global Franchise Excellence
The influx of Private Equity capital in franchising has accelerated the growth of many franchisors and multi-unit franchisees. This wide-ranging interview with Dr. Gosser covers multi-unit operators, PE history in franchising, the PE power dynamic, and how PE transforms brands - including pros and cons of PE investment in franchising.
Mastermind Minutes Podcast: PE's Impact on Emerging Franchises
This in-depth interview focuses on private equity's impact especially on emerging brands and how brands can set themselves up for growth, success, ....and potentially a PE transaction down the road.
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PRIVATE EQUITY’S IMPACT ON FRANCHISING
EMERGING BRANDS
TRENDS
BUILDING SMART
PROSPECTIVE FRANCHISEES
TURNAROUNDS & CASE STUDIES