Primrose Schools(R) Announces New Equity Partner
Roark Capital Group Shares Vision of Advancing Quality Early Education in America
June 16, 2008 // Franchising.com // (Acworth, Ga.) – Primrose Schools, the nation's leader in educational child care, announced today it has entered into a strategic equity partnership with Roark Capital Group, an Atlanta-based private equity firm. The move further positions Primrose Schools to achieve its No. 1 goal of advancing early childhood education in America through investments in resources to contribute to the quality and excellence of its more than 180 franchised preschools. The new partnership will also promote the company's continued, controlled national expansion to meet growing parental demand for quality early childhood education.
"Primrose has partnered with professional franchise owners and staff and the entire organization has worked diligently to earn a reputation as a trusted brand with families," said Jo Kirchner, President and CEO of Primrose Schools. "Our company is at its tipping point towards achieving national brand leadership presence. We have always maintained a clear vision to deliver the best and most trusted services in our educational child care segment. Roark Capital shares our philosophy. The capital from our partnership will allow us to continue to invest in infrastructure, innovation and our franchise system to maintain continual improvement for the Primrose brand at all levels and raise consumer recognition across the country."
With more than 180 schools in 15 states and the 200th location expected to open by year's end, Primrose is strategically identifying additional communities around the country which face a significant demand for premium educational child care. Currently, about half of the system's franchise owners operate a single school. To facilitate pent up demand for organic growth, capital will be invested in resources to help the real estate development team accelerate the location of sites. The company will also work to secure alternative financing strategies to help existing Primrose Schools' franchise owners open a second location.
In seeking an equity partner, Kirchner said Primrose Schools' top priority was to find an investor who understands the opportunities to advance education in America and sees opportunity for Primrose to play a key role in shaping the future of early childhood education like its previous owner, American Capital Strategies, Ltd. (Nasdaq: ACAS). Robert W. Baird & Co. served as exclusive financial advisor to Primrose Schools in connection with the transaction.
"Roark Capital shares the genuine integrity and guiding principles on which Primrose operates," Kirchner explained. "With Roark's support and consultation to our management team, Primrose will continue its strategy of accelerated, but controlled growth, to continue to provide the high quality experience for children, families and staff that we've worked so hard to achieve. This will benefit the entire Primrose family, from our franchise owners to our school and corporate staff. In the end, this new partnership also presents tremendous value to our existing and future Primrose Schools families."
Neal Aronson, Managing Partner of Roark Capital, said he looks forward to applying his firm's experience and track record in franchising to help Primrose Schools advance. Earlier this year, Roark announced the final closing of its second institutional private equity fund, capping commitments at $1 billion. Roark has made a strategic decision to invest in educational concepts that meet stringent criteria. Primrose was the first investment to be made in the educational category.
"Primrose Schools has established itself as the premium provider of educational child care," Aronson said. "Jo Kirchner and her executive management team have successfully been executing on their vision for years and have earned the reputation for being the most trusted brand leader in the educational child care business. This partnership builds a solid foundation for our future educational investments."
In addition to its 200th location this year, the partnership comes at a time when Primrose is anticipating the building and piloting of an urban model prototype in Midtown, Atlanta to respond to the resurgence of urban living for families across America.
Robert Klein, Managing Director, Buyouts, American Capital, said the sale of Primrose Schools to Roark Capital makes sense for all three parties. "We have been thrilled with our investment in Primrose and pleased to have supported Jo Kirchner and her team as they've steadily grown the value of the business. We expect to see further growth in the business as we continue to hold a small stake alongside the company's new majority financial partner."
About Primrose Schools
Founded in 1982, Primrose Schools is the country's leader in early childhood education. Primrose Schools' foundation is based on providing quality, early education and child care services with a balance of learning, character development and play. Developed by and taught exclusively at Primrose Schools, the school's Balanced Learning® curriculum dynamically blends child-initiated play and teacher-guided instruction. The company's success, fueled by parents' demand for quality child care, is sustained by individual school owners and teachers.
Primrose Schools has achieved accreditation status from the Commission on International and Trans-Regional Accreditation (CITA), which is managed by two participating regional commissions: Southern Council on Accreditation and School Improvement (SACS CASI) and North Central Commission on Accreditation and School Improvement (NCA CASI). Although these institutions have been evaluating schools and colleges for more than 100 years, Primrose was the first educational preschool in the United States to achieve this award. Primrose Schools currently operates more than 180 schools in 15 states. For more information, visit www.primroseschools.com.
About Roark Capital Group
Roark Capital Group is an Atlanta-based private equity firm that specializes in business and consumer service companies with attractive growth prospects and revenues ranging from $20 million to $1.0 billion. Specific areas of focus include franchise, direct marketing, business services and financial services. The firm has more than $1.5 billion of equity capital under management. For more information, visit www.roarkcapital.com.
About American Capital
American Capital is the only private equity fund and the largest alternative asset management company that is a member of the S&P 500. With $19 billion in capital resources under management, American Capital is the largest U.S. publicly traded alternative asset manager. American Capital, both directly and through its global asset management business, is an investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital and its affiliates invest from $5 million to $800 million per company in North America and €5 million to €500 million per company in Europe. Visit www.AmericanCapital.com or www.EuropeanCapital.com for more information.