Restaurant M&A Advisory

Serving at the Intersection of Capital, Concepts, and Management Globally

Aaron Allen & Associates is a global restaurant strategy firm that brings to bear an unmatched toolkit and expertise when it comes to middle-market foodservice transactions.

We specialize in working with middle-market restaurant companies (between $20m–$2b in revenues) and work with capital providers, emerging and established concepts, and management teams: 

Our experience in the foodservice industry has made us the go-to source for both buyers and sellers when considering transactions. Our firm has been approached by $6–$7b of capital on the buy-side earmarked specifically for foodservice investments.

We are consistently working with a number of promising concepts seeking growth capital or strategic partnerships (many of which are pre-process) around the world (particularly focused in the U.S., Europe, and MENA).

As match-makers, we leverage our know-how and know-who within the restaurant industry to help install management teams and identify candidates for board-level advisory roles.

Connecting Buyers and Sellers

Due to our unmatched depth and breadth of foodservice industry specialization and advisory experience, our firm’s global know-how and know-who can bring together a powerful blend of influential industry leaders and proprietary tools to effectuate remarkable results for middle market investors and operators across the full spectrum of the industry and globe.

Buy-Side Advisory

  • Industry Intelligence
  • Investment Thesis Ideation
  • Deal Origination
  • Commercial Due Diligence
  • Operational Due Diligence
  • Post-Acquisition Strategy
  • Operating Partnerships
  • Advisory Board Participation

Sell-Side Advisory

  • Readiness Audit
  • Valuation Opinion
  • Value Enhancement Strategies
  • Business Plans
  • Financial Models
  • Buyer/Partner Identification
  • Investor Presentations
  • Deal Management

Don't Wait Until You're Hungry to Go Hunting

Whether you’re an operator or investor, there are a myriad of potential ways forward (in an era of coronavirus or not). There is potential across a variety of geographies, categories, cuisines, and phases of the business cycle.

And remember, the strongest hunters do not wait until they’re hungry to go out hunting. Preparing for this flurry of investment activity ahead of the match being lit lays the foundation for a successful excursion.

Restaurant Mergers & Acquisitions: Frequently Asked Questions

Here are some of our thoughts on the most common questions we hear about restaurant M&A.

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.

The typical M&A process can take anywhere from 4 months to a year (though it can certainly move faster or slower, depending on the situation). 

Buy-Side: For buyers, the process starts with scanning and sourcing the deal landscape to identify potential targets — then establishing a fair price and negotiating terms for a target company. The diligence process (including legal, financial, commercial, and operational) to validate the investment opportunity will also help identify low-hanging fruit and longer-term potential for the business as well.  

Sell-Side: Establishing clear criteria to look for in an investor or partner and defining goals for the outcome of taking on an investment is the best place to start. In any case, the process on the sell-side for a successful M&A transaction usually entails: determining investment parameters, preparing a teaser and CIM, valuating the business, receiving a letter of intent (LOI), preparing due diligence materials, negotiations, signing a definitive purchase agreement, and closing. More on how restaurants can prepare for a PE transaction here. 

There are multiple considerations when selling a company besides the target valuation for the business: the role the owner will play after the transaction, legacy and plans the seller would like the company to achieve (and therefore what’s the best type of investor), the level of involvement current ownership wants to keep, plans and communication for the existing management team and employees, and the intended timeline all play a role.

Before selling, the owner (with the help of a seasoned M&A advisor) will want to get clear on the goals and timing of the transaction. The owners may set these goals on their own, but the perspective and experience of an M&A advisor will help set realistic expectations and avoid costly mistakes.
 
Ahead of preparing for a deal, pressure-testing the P&L is always a good idea. From there, it’ll mean working on marketing materials (teaser and Confidential Information Memorandum), and there’s a need to be ready in advance — company data and documents need to be organized to cause a positive impression and save time in the Due Diligence phase. Simultaneously, the M&A advisor will get a buyer list in preparation for going to market.

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).

There are three valuation methods widely used across business sectors:

  1. Cost Approach: Considering the market value of assets, intellectual property, and intangible assets — not commonly used in restaurants
  2. Market Value Approach: Using comparable transactions to derive a value using multiples including EV/EBITDA, EV/Sales, or P/E
  3. Discounted Cash Flow Approach: Projecting cash flows and using a WACC rate to obtain a fair present value factoring in same-store sales growth, new openings, and changes in operating costs

A range of values for the restaurant chain will be obtained from each valuation model and the expected valuation for the business will most likely be agreed upon in the intersection of the results. Having support helping to prepare for an investment can help to establish parameters and a fair valuation for your business. 

Are you an operator or investor seeking a restaurant advisor?
We're here to help.