As Principal

Bailiwick Capital operates as fund-less sponsor. In the world of mergers and acquisitions, the financial sponsor community plays a significant role in acquiring businesses, frequently competing with strategic buyers. The financial sponsor community is comprised of multi-billion dollar, institutionally backed funds, smaller institutional funds, pledge funds and fund-less sponsor like Bailiwick, who raise equity and debt capital for transactions on a deal-by-deal basis.

Value Proposition
Bailiwick offers an excellent value proposition as a fund-less sponsor to equity investors and family offices focused at the “far” lower end of the middle market, particularly in chain restaurant companies. We believe there is significant

Bailiwick offers each transaction the following value:

• Industry expertise. Bailiwick brings over 30 years of experience in the restaurant industry in the areas of casual and fine dining development, operations and franchising; and over 20 years of corporate finance, private equity, private debt, M&A experience.

• Managing opportunities and risks. Bailiwick offers a unique combination of business and finance experience that brings a skilled perspective to challenges facing growth restaurant  companies and their management teams.

• Excellent strategic advice. Substantiated by our track record advising chain restaurant operators and corporate leadership with rollout strategies, concept development, franchising, feasibility, M&A, capital procurement, add-on acquisitions and other growth initiatives.

• An objective partner with value-added interaction. Bailiwick is more than a “finder”. It participates with management and equity sponsors and contributes to the primary goal of maximizing the total value of the Company for the term of the investment, which serves as a differentiating value-added resource to management.

• Possesses well-established relationships. Enhanced credibility and access to capital through our strong relationships that generate attractive acquisition and liquidity opportunities.

• Access to management. Bailiwick is able to leverage significant industry resources in the consumer sector to stimulate management buyout opportunities and attract talented managers for placement in those acquisitions Bailiwick originates.

• Has direct experience. Bailiwick has participated as a fundless sponsor and managed the internal corporate development and CFO functions of emerging growth chains of the size targeted in this plan.

Key Target Attributes:

Strong management Teams. The management team must exhibit the skills and experience to execute its business plan, based on success at the target company or in prior, related activities.

Large and growing Assessable market. Since the goal is to invest in growth companies, the target market must be sizable enough to permit the company to grow substantially in size and value over the near term.  This will normally suggest multiple geographies, but may include concepts that can grow to dominate a single regional market.

Superior Value Proposition. The target company’s target market segment should be well defined, and the company will have a compelling price/performance position in that segment, and a demonstrable advantage over its competition (often as a “first mover” or innovative concept with compelling unit-level economic advantage).

Acceptable Concept Risk. The target concept will have proven itself in multiple locations. A footprint that meets or exceeds the pro forma transaction cited below.

Ability to Scale. The target company should be able to grow its business quickly and effectively, having the necessary management talent and systems infrastructure either in place or accessible (with input from Bailiwick Capital Partners).

Attractive Financial Model. We look for companies that can create substantial value by executing an achievable development plan.  These companies should command acceptable margins over the long-term.  The Company will look for restaurant chains with superior unit-level economics that will provide acceptable returns after factoring in rising real estate and labor costs and some inevitable weak performers. See Pro forma Transaction criteria below.

Appropriate Valuation. The Day-One valuation of the target company, with its growth characteristics, stage of development and market opportunity, should provide the opportunity for a sufficient return to the capital sponsor.  The Principals have significant transaction experience and a thorough understanding of market valuation criteria. In addition, Bailiwick Capital Partners has particular skill understanding the social web (Social Media Capital)  through its partnership with FohBoh, Inc., a leading social web technology company for the restaurant industry.

Visibility of Exit. Exits will typically be realized through privately negotiated sales or recapitalizations within 48 to 60 months from investment.  The Company has significant access to both strategic and financial buyers nationwide and plans to creatively leverage business combination opportunities as appropriate to boost value while expediting exits.  No reliance will be placed on public offerings as an exit vehicle, but public offerings will be explored when appropriate.

Investment Size. The General Partner expects investments to range between $6 million for minority positions and $15 million for majority positions, averaging approximately $10 million.

Downside Protection. In many cases investments may be structured in whole or in part as mezzanine debt or preferred equity in order to further mitigate risk, particularly if pricing is aggressive due to the perceived quality of the concept.  In these instances, investments may be structured to be realized ahead of other financial or management investors.  In the case of a majority (control) investment, we will recommend entering into management ownership agreements that incent management or other investors to effect an early realization of the investment.

Pro Forma Transaction
Bailiwick will source and evaluate regional and national chain restaurant and retail investment opportunities that possess the following attributes:

• We target exciting, well branded, multi unit restaurant chains that generate between $2 million and $4 million in company-level EBITDA

• Single or multiple markets penetrated with unrealized growth opportunities

• Attractive concept attributes with high guest frequency.

• Superior branding and actively using social media

• Under-utilized take-out business.

• Licensable

• Quick-casual and Casual segments, operating three day-parts

• Small footprint of less than 3,000 sq. ft.

• Superior unit economics. generating greater than 18% store-level EBITDA

• Stable unit-level management team, with systems in place

• Solid real estate leases with at least 5 years average remaining term

 

When acting as fund-less sponsor, Bailiwick will

• Source, evaluate, value and structure a pro forma transaction

• Draft letter of intent

• Secure a lock up agreement

• Arrange for mezzanine debt

• Source and secure private equity sponsorship

• Recruit a qualified CEO to assemble a team, if necessary

• Coordinate and assist sponsors with due diligence efforts

• Assist the equity sponsor and lenders as required to close the transaction

• Provide ongoing fee-based consulting to equity sponsor and management

• Participate at the board level