Tuesday, April 12, 2011

Industry Thoughts | The Future of Restaurants and Private Equity's Possible Involvement

Back in November, Dan Primack of Fortune penned a post about how private equity firms "have a responsibility to company employees" while not only to their LPs. He alluded to his Bugaboo Creek Steakhouse "BBQ chicken nachos night" (which looks delicious by the way) where his digging led him to Trimaran Capital Partners's selling of the entire parent company (which also owned Charlie Brown's Steakhouse and The Office Bar & Grill, places I grew up with in New Jersey).
Today I saw updates in terms of all the companies:

  • Praesidian Capital is buying Charlie Brown's for a paltry $9.5MM (Trimaran bought them for $150MM in 2005 from Castle Harlan). All of the 20 remaining stores are rumored to stay open.
  • Bugaboo Creek got sold to an unknown buyer for $10.1MM in March 2011.
  • The Office got sold to Villa Enterprises (which runs 4 fast food joints) for $4.7MM in January 2011.

It's a fresh start for all 3 restaurant chains and a good sign. Specialty has been key for consumer-focused private equity acquisitions these years, and restaurants, if owners revitalize their product or brand portfolios (or if PE execs see a potential revitalization), this buying trend should continue.
It will be an interesting sector to watch.

Friday, April 1, 2011

Industry Thoughts | Private Equity and the Investment Thesis

Dan Primack of Fortune penned a quick post today wishing that private equity firms would give a little more detail about their overall investment thesis when they buy portfolio companies. Reporters care less about the seller than the buyer, Dan writes, so explain at the closing of the deal why a firm bought the company and what's the game plan while they still have journalists' attention.

Yes, Dan, it would be nice for firms to be a little more specific. (It would also make MY job easier to determine deal flow for my work.) However, until there's more specific and targeted regulation on PE, you're not going to get as lucky and have PE firms be more welcoming in terms of sharing that information. Knowing firms I deal with every day, I'd be pretty surprised if they changed.

Now, while I say that, I'm not being bitter towards private equity firms. It's more so that there's no reason to share that information about the investment thesis, as the only people who REALLY need to know are the LPs and lenders. Again, when regulation hits, we'll probably see some compromises.

One other thing: I also think that because journalists in the private equity space have different sources, it's important to recognize their scoops. A good example is with HIG's Hooters of America deal: The Deal was able to uncover the mystery private equity firms that worked with Chanticleer (along with the purchase price), then Pitchbook was able to identify the Texas Wings buy that went along with the deal. It sucks sometimes that you have to go through 5-6 sources to get the entire story, but that's how the scoop world works.