Restaurant M.&A. forecast
Lower valuations in the restaurant industry will lead to more acquisition activity in 2016, said Brad Swanson, segment head of KeyBanc Capital Markets’ consumer and retail investment banking group.
“I think you’re going to see (restaurant) M.&A. pick up in 2016 significantly,” Mr. Swanson told Food Business News. “You’re going to see private equity out there sniffing around, looking at deals that could get done now with a lower valuation expectation than a year or two years ago, when valuations were so high.”
Restaurant companies struggling to maintain growth may buy emerging brands in other segments. Buffalo Wild Wings, the Minneapolis-based casual dining company, for example, recently invested in fast-casual concepts, including Rusty Taco and PizzaRev.“Implications are you’re going to continue to see more concepts being developed and financed earlier by private equity because they’ll feel like there will be a home for those either in the public market or the M.&A. market in the next three to five years,” Mr. Swanson said. “(Restaurants are) a tough business but easy to understand. I think private equity continues to find it to be a good use of capital when they pair a good management team with a good company.”