CHICAGO —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Industry transactions in 2008 already had troubled tones, the company’s latest research showed, as 21 deal announcements came from restaurant companies in financial difficulty, up 31 percent from 2007. In its 2008 Chain Restaurant Merger & Acquisition report, released in late March, the Chicago-based firm reported that the total number of announced transactions last year grew 3.6 percent from 2007, to 116 deals. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
(To view charts featured in this week's print edition, click here.) —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
“We anticipate that there will be more transactions involving financially troubled companies, and several notable public companies will attempt to go private,” said David Epstein, a principal at J.H. Chapman, referring to the year ahead. “We also expect that the tight capital situation which exists today will improve somewhat by the end of the year or early 2010, which should allow more traditional merger-and-acquisition activity.” —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Così Inc., the operator or franchisor of 145 fast-casual restaurants, may buck the trend of privatization that J.H. Chapman foresees. The company, which has posted annual losses for two years, said last month it had ended its months-long review of strategic alternatives and will not undertake a going-private sale. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
“After receiving and reviewing several proposals with respect to either a financing or acquisition transaction…the board determined that pursuit of the company’s current business plan as an independent public company is the strategic alternative that offers the best opportunity to maximize shareholder value,” the company said in a statement. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Last year, deal making between franchisors and franchisees drove restaurant industry mergers and acquisitions, as tighter credit markets and weaker industry fundamentals reduced traditional buyout activity, the J.H. Chapman report showed. The largest group of last year’s transactions, accounting for 40 deals, occurred between franchisor and franchisee. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
J.H. Chapman tracks announced deals only, so some may not have closed by the year’s end or may not have closed at all. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
“The franchise market is driving transactions for two reasons,” Epstein said. “First, franchisors are selling restaurants so there is more supply today, and second, there are still lenders willing to provide financing to tier-one franchisees looking to expand within their own concept.” —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Last year numerous franchisors initiated refranchising strategies to conserve cash given the tighter economy. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Well-capitalized franchisees were able to take advantage of these programs to expand. Some of the larger deals occurred between NPC International and Pizza Hut and Apple American Group and Applebee’s. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Unlike in years past, the number of traditional change-of-ownership deals fell in 2008. Just 20 deals involving an operator purchasing another concept were announced last year, down 44 percent from 36 such deals in 2007. A total of 81 deals were marked as divestitures in 2008, up from 72 such deals in 2007. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
Equity funds continued to invest in the restaurant sector, recording 38 announced transactions, a 12-percent increase from 2007. Deals included Kohlberg & Co.’s purchase of Centerplate Inc.; and Golden Gate Capital’s purchase of an 80-percent stake in Romano’s Macaroni Grill from Brinker International. —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
“While valuations have declined, deals are still closing,” Epstein said. “Equity groups like the restaurant industry, and many think there are more good buys today than in the past.” —Restaurant industry merger-and-acquisition activity this year will be driven largely by financially distressed companies looking for buyers or sponsors as chain restaurants continue to face declining sales and increasing costs, according to new data from investment bank J.H. Chapman Group LLC.
