Multi-Unit Restaurants Dividend Recapitalization: An Independent Sponsor's Counsel
Securities and M&A counsel for independent sponsors structuring multi-unit restaurants transactions, from LOI to close to the capital markets that open up afterward.
The economics on a multi-unit restaurants platform deal usually hinge on a handful of structural decisions. Dividend Recapitalization is one of them.
The typical multi-unit restaurants platform sits at $8M to $80M EV with EBITDA in the $2M to $14M range. The thesis runs on franchisee roll-up or regional concept acquisition. The franchisor consent letter is the deal. Get it lined up before you spend money on diligence.
How Dividend Recapitalization actually gets structured.
Time the recap when leverage has come down and EBITDA has grown.
Structure the new senior debt with room for ongoing operations and add-ons.
Confirm that the LP waterfall recognizes the distribution as recap, not exit.
Coordinate tax treatment of the distribution with the LPs in advance.
In multi-unit restaurants, layer in franchisor LOI letter requested before market as part of the Dividend Recapitalization workstream.
Recapping too early. Lenders price it; LPs feel it; the next deal cost goes up.
"Recaps are a tool, not a habit. Use them when the operating story supports them."Jason Powell · Dividend Recapitalization
The deal is one thing. The capital that opens up after close is another.
Capital after close is where the IRR actually gets made. The right introductions at month nine through month thirty are where this practice works as hard as it does at the LOI.
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Dividend Recapitalization for Multi-Unit Restaurants, on independent sponsor terms.
Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.