The Financial Markets are Heating Up….Have you Been Positioning your Business for Growth and an ideal Valuation?
Over the past year, the business climate has continued to trend positive….the recovery has continued to show signs of improvement – could it be time to franchise your brand and business model in order to capture some of this growth?
Initial Public Offerings: 72 companies went public in the U.S. in the 1st quarter – the largest number of new issuers since 2000 -raising a total of 11.1 billion. And, as of Monday 54 of the 72 of them were trading above their IPO price.
Mergers & Acquisitions: Global mergers & acquisition activity totaled $710 billion (Thomson Reuters), up 54% from last year.
Private Equity. Private equity firms did 850 deals, representing investments of greater than $152 billion (Pitchbook), up 11%.
Venture Capital. 1,348 companies raised more than $15 billion from venture capitalists, up 36%. They also raised $10.3 billion for 578 funds in the 1st Quarter, up 51% from last year.
Franchise Brands have seen an equally increased share of big dollar moves in IPO’s and Venture Capital plays.
A large number of franchise systems went public in 2013 playing into the increasing market trend for investors looking to franchising for big returns. Among the franchise companies that successfuly completed IPOs were Noodles & Company (NASDAQ: NDLS), Potbelly Corporation (NASDAQ: PBPB), RE/MAX Holdings, Inc. (NYSE: RMAX) and Hilton Worldwide Holdings, Inc. (NYSE: HLT). There will be more of these taking place in 2014 as both the franchise market and investor markets are continuing to heat up.
Focus Brands, whose franchise brands include Auntie Annie’s, Carvel Ice Cream, Cinnabon, Moe’s Southwest Grill, Schlotsky’s and Seattle’s Best Coffee is supposedly looking to take their brand and franchise investment portfolio public.
The La Quinta Inn Franchise brand just did an initial public offering and took the brand to the stock markets. Other franchise companies that are reported to be thinking about an IPO include Checkers Drive-Ins, Five Guys and Papa Murphy’s. Last year Smashburger was also thought to be to be gearing up for an IPO until it announced in June that it had secured a $35 million debt facility from New York-based private equity firm Golub Capital, effectively ending any speculation about an imminent public offering.
Franchising provides maximum valuation for brands and business growth models….the decreased overhead and lean operating structure of a franchise system can provide brands with valuations of 8-17 X earnings depending on the system’s performance and growth model. Franchising can in some cases make an ideal exit strategy or long term financial play.
For more information on how to Franchise Your Business or develop your brand for growth, Contact Us for a Free Consultation on Franchising.