Franchise M&A Update: August 2024
Welcome back to Franchisor.com’s “Franchise M&A Update” column, your monthly inside scoop for all franchise M&A, industry rumors and bankruptcy stories. A little later this month, as I took a much-needed vacation (while also battling some sickness along the way). With that, let’s get back into the swing of things!
If you ask any finance industry insider, August is typically one the quietest months for deals going through. However, 2024 has brought the heat, with several proprietary deals that surprised many industry trackers (including this author).
Let’s check out what went down in August and what *could* be coming in Q4 2024:
Show Me The Money:
Beauty/Health/Wellness:
Vital Care Receives Strategic Investment From Berkshire Partners, Leonard Green & Partners, and Linden Capital Partners: One of the rare “banked” processes being announced in August, finance-insider darling Vital Care switches hands again, bringing in more sophisticated backers to join original investors, Linden Capital Partners. Vital Care has always been quiet, which sometimes the franchise community can confuse for lack of success. But for this brand, it means anything but. Solving a niche like providing infusion services for acute and chronic patients in a cost-effective way was a revolutionary offering for franchising; and it seems that private equity agrees. I’d expect this brand to continue up the “PE ladder” for many years to come.
Extraordinary Brands Acquires Their 3rd Brand In As Many Months, Solidifying Their Place As a Fitness Aggregator To Be Reckoned With: Another month, another acquisition for the Paul Flick-backed Extraordinary Brands. In an effort to build our industry’s next fitness aggregator, the holding company digs into the barre fitness space with The Neighborhood Barre. Similar to Xponential Fitness’s triumphant rise in the mid-2010’s, The Neighborhood Barre is another brand helmed by an inspiring female founder with a knack for creating community. In this writer’s opinion, I believe this platform will continue to build via other fitness brands like Pilates, boxing, stretch and potentially boutique wellness brands in industries like IV infusion, cryotherapy and infrared sauna.
In A Major Surprise, Industry Rivals Any Lab Test Now And ArcPoint Labs Merge To Form New Holding Company, CRESSO Brands: While I knew Any Lab Test Now had investment bankers working on a potentially deal on a couple of occasions, I’m not sure I saw this as being their destiny. Seemingly out of nowhere, two rivals decided it was better to go at it together rather than alone. With investors from both sides forming a new holding company (and a new Board of Directors to boot), this is as classic of a strategic merger as you see in franchising. Do I think this will work? Not sure. Will they buy other brands in the greater “health” space? Time will tell. But I do love when two companies put aside their differences for the greater good of their franchisees, and this may be an example of that.
Pet Services:
Multi-Industry Aggregator, Loyalty Brands, Adds Salty Dawg Pet Salon & Bakery To Their Portfolio: Since its formation in 2019, John Hewitt has quietly been adding both majority and minority stakes in brands across several disciplines within franchising. In recent years, he has been spending more time in B2B and pet services than anywhere else. His first foray into the pet services space, mobile grooming concept Zoomin’ Groomin’, seems to be just the beginning. Most aggregators look for a “brick & mortar” brands that takes down more revenue on a yearly basis, so Salty Dawg certainly fits the bill here. The brand likely didn’t think they’d be finding themselves selling out this early (unfortunately, co-founder John Kanski’s death made it impossible to continue with the current regime). Sally Facinelli, an industry veteran who got her start in franchising’s on the franchise development side of Aussie Pet Mobile, will continue to helm the brand as their new CEO. Exciting things ahead for this aggregator, I see them continuing to purchase low-market brands in the pet services space for years to come.
Bad, Bad News:
Hooters Hires Restructuring Advisors In Hopes Of Avoiding Chapter 11: We wrote in July that things weren’t looking so good for Hooters, and it seems their board may agree. Whenever a brand hires a “restructuring team”, that normally doesn’t bode well for the current regime or the company as you know it. First, they closed 40+ stores, now they bring in financial gurus to try and do some gymnastics. Keep on the lookout for Hooters to be the next one to be victim of a bankruptcy, unless we see someone like Jeff Crivello come in as a stalking horse bidder by buying their debt.
Parent of Publicly-Traded Owner Of BurgerFi & Anthony’s Coal-Fired Pizza Hires Chief Restructuring Officer, May Not Make It Through Rest Of 2024: Speaking of Jeff Crivello, his company TREW Management has combined forces with industry-titan L Catterton to enter into a forbearance agreement with the company to float them through the rest of the year. Despite bringing in turnaround artist Carl Bachmann to try and stop the bleeding, it seems that BurgerFi’s position may have been too precarious even for someone with the pedigree of Bachmann. The “better-burger” space has struggled mightily in the 2020’s (something Bachmann knows all too well from his Smashburger days). My take: another notch in TREW Management’s belt, as I think BurgerFi will likely reach the brink before the year is done.
That’s all for this month. Lots of new deals likely to come in Q4 2024, stay tuned for those and more to close out this year. As always, thanks for reading! If you have any tips and have some comments you’d like me to quote you in here, please email me at zack@franchisesuppliernetwork.com. Cheers!
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