CASE STUDIES

Acquisition

Franchise Consolidation

Client Background

A seasoned operating partner of a large QSR franchisee required financing to support the acquisition of 30 units, resulting from the break-up of a prior partnership. Capital need was in excess of what traditional lenders would provide and also included follow-on capacity for future acquisition opportunities.

The operator had limited equity yet desired a non-dilutive capital solution, where they would own nearly all of the business.

Our Solution

CapitalSpring provided a one-stop financing solution that allowed the operator to fully separate from their existing partner and then quickly double the size of their business through an add-on acquisition.

Our relationship with the operator allowed us to underwrite on pro forma EBITDA, despite high going-in leverage. We also provided flexible terms for quick deleveraging and ultimate take out with conventional bank debt.

  • Sourced and provided follow-on financing for multiple add-on acquisitions

  • Supported new unit growth with customized build-to-suit financing

  • Enhanced operations through mystery shops, detailed 4-wall benchmarking, and improved back-office processes

Sponsor Financing

Client Background

A leading private equity firm required committed financing for the acquisition of a substantial franchisee within a large full-service brand. The Company had a proven management team, a history of solid financial results, and an exclusive development agreement with ample whitespace.

Buyer’s preference was for a subordinate lender with i) a knowledge and comfort level with restaurants, ii) a working relationship and form inter-creditor with the chosen senior lender, and iii) a willingness to allow future debt incurrence to fund remodels and new development.

Our Solution

CapitalSpring worked quickly to underwrite the transaction, issuing a hard commitment letter within several weeks, and ultimately provided a mezzanine loan with a “silent” second lien on collateral and market inter-creditor rights. Our comfort with the credit and aggressive advance limited sponsor equity contribution to 27%.

  • Sponsor leveraged CapitalSpring’s due diligence assessment and Strategic Operations Group’s unit economic analysis

  • Acted as a sounding board on select remodel and operational items post-closing