Multi-Unit Restaurants Earnout Structures: 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.
An independent sponsor closing multi-unit restaurants transactions in the $8M to $80M EV range has a defined set of moves at the Earnout Structures stage. Most of them are not in a generic M&A textbook.
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 Earnout Structures actually gets structured.
Tie the earnout to gross profit or contribution margin, not revenue, to avoid sandbagging.
Cap the earnout window at 24 months. Anything longer is a litigation risk.
Build acceleration on a change of control or buyer-driven operational change.
Name an arbitrator and the accounting standard in the agreement.
In multi-unit restaurants, layer in franchisor LOI letter requested before market as part of the Earnout Structures workstream.
Drafting the earnout in three paragraphs. Earnouts are the second-most-litigated provision in M&A.
"If the earnout could be measured by a teenager with a spreadsheet, you wrote it well."Jason Powell · Earnout Structures
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.
Related deal pages.
LOI Negotiation for Multi-Unit Restaurants
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for Multi-Unit Restaurants
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Multi-Unit Restaurants
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for Multi-Unit Restaurants
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Earnout Structures for Healthcare Services
roll-up of physician practices and ancillary service lines
Earnout Structures for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
Bring the multi-unit restaurants deal. Get Earnout Structures done right.
Direct counsel from a securities and M&A attorney with billions in structured transactions, the independent-sponsor-native playbook, and the capital markets network that opens up post-close.