Multi-Unit Restaurants Deals: Working Capital Adjustments Done Right
Securities and M&A counsel for independent sponsors negotiating multi-unit restaurants transactions, from LOI to close to the capital markets that open up afterward.
Working Capital Adjustments on multi-unit restaurants deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.
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 Working Capital Adjustments actually gets structured.
Set the peg based on a trailing 12-month average, normalized for seasonality.
Define each line item in the schedule, especially deferred revenue and accrued vacation.
Cap the dispute resolution timeline at 30 days post-close.
Build a true-up payment mechanism funded out of escrow.
In multi-unit restaurants, layer in franchisor LOI letter requested before market as part of the Working Capital Adjustments workstream.
Using an unadjusted average that ignores seasonality. You pay twice for the same cash.
"Working capital is where deals are won or re-traded after LOI. Read every line of the schedule."Jason Powell · Working Capital Adjustments
The deal is one thing. The capital that opens up after close is another.
After close, the call list for refinancing, recapitalization, and growth equity gets short and known. Jason carries that list.
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An LOI on the desk, a multi-unit restaurants target, and a Working Capital Adjustments question worth a real conversation.
Twenty minutes of practitioner-grade input from a securities attorney whose first move is to read the deal, not the engagement letter.