A fast casual restaurant concept with 119 company-owned cafés and 109 franchised cafés that serve freshly baked breads, signature sandwiches, pre-made and tossed salads, over 30 soup varieties and café beverages.
The Company sought a recapitalization that would support divergent goals: to provide liquidity to the shareholders and to fund both Company-owned unit growth and growth in the franchise business.
Engagement Process and Outcomes
Nature of the Assignment — A private equity group had approached the Company and had discussions regarding a recapitalization. The board of directors hired Brookwood to assist in the negotiations with that group and to contact other potential buyers in a limited market check.
Financial and Strategic Buyer Scenarios — Brookwood contacted a select group of strategic and financial buyers, generating interest from several parties. The management team was willing to remain with the Company and maintain a minority ownership stake if a financial buyer proved to bring significant operating expertise with its investment. Brookwood presented a variety of financial buyer and strategic buyer scenarios and multiple indications of interest to the board of directors.
Result — Management received several attractive offers and ultimately chose to sell a majority stake in Au Bon Pain to LNK Partners. The transaction allowed the current management to achieve partial liquidity, while remaining with the newly capitalized Company and retaining minority equity ownership.
Press Release Excerpt
Brookwood Associates is pleased to announce that it served as exclusive financial advisor to Boston-based Au Bon Pain in the sale of a majority stake of the company to LNK Partners. Founded 30 years ago, Au Bon Pain is one of the most successful fast casual restaurant concepts in the restaurant industry, with 33 consecutive quarters of positive same store sales growth. The company operates over 225 bakery/cafés systemwide, including company owned and franchise cafés in the U.S. and internationally. Highlights of the assignment included:
Repeat User: This transaction represents the second advisory assignment for Brookwood with Au Bon Pain. In 2005, Brookwood advised Au Bon Pain in the management-led recapitalization of the company.
Complex Transaction in a Challenging Environment: Brookwood advised Au Bon Pain through a complex transaction that included numerous classes of preferred and common stock, varying dividends and intricate management option plans. Furthermore, the deterioration of the credit and M&A markets during the transaction posed further challenges. However, Brookwood was sucessful in getting the transaction closed on the original terms.
Excellent Result: The transaction allowed management to obtain significant liquidity, retain a minority equity interest in the conservatively capitalized growth company and partner with a highly experienced private equity firm that invested more than $100 million of equity to support the company's continued expansion in the United States and internationally.