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Exit Strategies

Feature Story:

The Other Side Of The Table: Successful Buyers Understand Sellers »

By Dean Zuccarello

As we work our way out of the current recession, we are already starting to see early signs of life in the merger and acquisition market.

2010 is evolving into the year of the transition buyers and sellers have been looking for. The significant unit contraction retail establishments have experienced in the current recession is causing companies to act more prudently when thinking about their growth strategies. Many brands have recognized the limitations of new-unit expansion and the inherent risks that accompany greenfield growth. Companies that have been on the sidelines with their growth plans are now starting to reemerge with a revised strategy for growth focused on acquisition and conversion, and enhanced availability to capital to fund growth...

Feature Story:

Timing CAPEX To Valuation: Plan Capital Expenditures To Maximize ROI »

By Dean Zuccarello

Historically, franchising has accepted EBITDA as the benchmark for establishing valuation. However, as seen over the past several years, valuations can vary widely across franchisors, franchisees, and company-owned concepts.

Franchising has seen transaction multiples ranging from the low single digits up to lofty double digits. So what is the justification for this wide range in transaction multiples? What makes a buyer willing to pay 8x for one deal, but only 4x for another?

In franchising, EBITDA multiples vary for several key reasons. This article explores the effects of capital expenditures (CAPEX) on franchise company valuations, and how CAPEX factors into the ultimate value a franchise owner receives in a transaction...

Feature Story:

Is There A Merger In Your Future?: Why Mergers Could Become A Hot Strategy This Year »

By Dean Zuccarello

Mergers and acquisitions (M&A) have been an instrumental component in franchising over the past two decades, particularly as a growth vehicle for expanding companies. Historically, most transactions in franchising have concentrated more on the "A" than on the "M." Some of the primary drivers for this have been cultural and business trends deeply entrenched within franchising. However, the current global financial crisis and franchising's own changing dynamics may alter this.
Why acquisitions have dominatedHistorically, the franchise industry has been predominantly represented by entrepreneurs in the form of franchisees and emerging franchisors. Given this fact, franchise companies often have a "lifecycle" pattern similar to that of the founding entrepreneur...

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