Transcript
A (0:00)
When I think about private equity, I kind of think about it as a ladder, right? You've got some people or some firms that are going to operate in the lower market and they're going to be, they're going to have a certain size fund, they're going to invest in certain size businesses, maybe a platform company that's healthy, and maybe they're willing to pay a good multiple for it. But then their goal is really through organic growth, through strategic partnerships and through accretive acquisitions to take that business and add on to it. And basically one plus one equals four or five. Because when you move it up to the middle market and there's funds that say I can't write a check less than 30 or $50 million, those companies are going to be writing bigger checks. And ultimately, the higher the EBITDA is or the cash flow minus certain things, then the larger the multiple genuinely is. So, so it's kind of this game of, of, of taking an asset and then figuring out how to enhance the asset for its benefit and for the benefit of any of the other assets that are put with it. And that's how extra capital is generated. And then of course, there's always some, there's always a bigger fish that if you can build it in the middle market and you build it to a 50 or $100 million EBITDA business and there's going to be somebody else at lat levels that's looking to make those types of investments, is that something that most business owners that you engage with understand the concept of, or is it even important for them to do so?
B (1:40)
It's part of. When we take on a new client and during the process of onboarding a new mandate, we really spend a lot of time with the client trying to. Do they want to be the platform? Do they want to be part of a platform? If you've become part of a platform like Empower brands or Neighborly or Authority brands in the franchise space or an Unleashed brand, you know, that's a different second by the Apple. Our client's going to get, you know, shares or roll forward into a diversified portfolio of franchisors versus just being, you know, a single franchisor investment. So there's a lot of benefits to becoming part of an, what we call a franchisor aggregator. But there's also, you know, you're, you're diversifying your upside and your risk by, you know, your firm isn't going to be the sole determiner of future value on the next exit. So. But there's been, you know, the, the great thing about the franchisor space is, you know, even KKR and KKR owns Neighborly now. And 10 years ago KKR had no interest in the franchisor space. So you're seeing much the largest of the large private equity firms invest in franchising. Blackstone has an effort now. They've made some big acquisitions in the franchisor space. So you're seeing all the way from the smallest private equity independent sponsors all the way up to the Blackstones and the KKR and the Susquehannas putting real money behind the franchise industry.