The Dealmakers: Is there hunger for more restaurant acquisitions? By Rick Zambrano
Recent transactions in the restaurant sector have continued to impress industry insiders. In all sectors, both volume and transaction were expected to gain pace in 2018, according to a report by Deloitte & Touche, The State of the Deal: M&A Trends. More than a third of companies with revenues in excess of $1B “intend to pick up the pace” on acquisitions in 2018. Private equity firms are also bullish. According to an article in Forbes, Triago Fund Advisory estimates that money raised by private equity funds for deals in 2017 totaled $621B, surpassing a previous record of $557B set in 2008. With so much money raised, it’s time for businesses to spend. And spend they will, as tax rates are much more favorable due to the current economic environment, creating better returns. RESTAURANT C-SUITE | Fresh, informed, inspired (by you) restaurant news 16
The total volume of U.S. M&A in 2017 was $2.9T, according to JPMorgan Chase’s Global M&A Outlook report-- the same amount as in 2016-but, the volume of transactions is expected to increase in 2018. Lower interest rates are indeed a reason for more deals among corporations and private equity firms, according to John A. Gordon, principal of Pacific Management Consulting Group. Multiples in the restaurant sector have been aggressive, and now is the time for more restaurant acquisitions to occur because selling companies can continue to rationalize higher valuations. According to Duff & Phelps in its June 2018 Quarterly Industry Report, enterprise value for restaurant brands is historically high for fast
