O sinteza utila pentru cei care se gandesc la tranzactii pe piata restaurantelor, de la
Meaningfully Move Your Market Share; Shore-Up and Secure Shareholder Value
In last week’s issue, we talked about our silver lining thesis for the restaurant industry, and how M&A fever will be catching across foodservice. To follow that up, we thought we could host a little Q&A session, sharing some thoughts on the most common questions asked about restaurant M&A.
We’re (officially) in a recession … what happens to valuations during a downturn?
It’s true — valuations typically take a cut during downturns. During the Great Recession (December 2007 to June 2009), U.S. restaurant valuations (measured by EV-to-Sales) decreased by 54% — from a peak of 1.3 in 2007 to a bottom of 0.6x in 2010. Valuations continued to fall after the recession was officially over (in June 2009) and it took three years to recover from that valley to pre-2008 values. The volume of deals also decreases in recessions. Between 2007 and 2009, the number of deals dropped by 37% and didn’t fully recover until 2011 (3 years after the start of the crisis).
1. Why should we consider an M&A Transaction?
This is a fair question — and M&A isn’t the right fit for every company’s current situation. On the buy-side, companies can benefit from expanded market share, gaining ground into new markets, and partnering with established operators while diversifying their portfolio. Sellers can also reap the benefits of broader market share, enhance their sustainability and longevity, and develop strategic partnerships to better optimize performance. In any case, thoughtful investment thesis ideation and well-informed due diligence are key foundational elements of a successful transaction and integration.
2. How long does the M&A Process typically take? What are the steps?
3. What does a seller need to do before selling a minority or majority stake?
4. What does a buyer need to do before pursuing M&A opportunities in foodservice?
In short, source and screen. The buyer will assess the market landscape looking to narrow down the segment with the best prospects and within that the possible targets (risk, benefits, and potential for ROI). Leveraging an advisor with industry-specific expertise can be key to accessing deals before they get to a bidding stage (therefore obtaining more favorable valuations).
5. What are the valuation methodologies for a restaurant chain?
6. Ready to Get Started on a Transaction?
- Investment Thesis Ideation
- Market Landscape Scanning
- M&A Readiness Assessment
- Investor Presentation Development
- Deal Sourcing and Target Identification
- Commercial Due Diligence
- Operational Due Diligence
- Value Creation Strategies
- Post-Acquisition Integration
- Board and Management Installation
- Growth and Expansion Planning
- Go-to-Market Strategy
- Performance Optimization
- Portfolio Planning and Rationalization
- Operating Partnerships
- Board Participation and Advisory
These Are the Moments When Market Share Moves the Most
