Pabst: Helping Owners Execute an Exit Strategy
Experience and problem-solving matter in the world of M&A, according to Bill Pabst, a principal with The Cypress Group. Effectively marketing a business for sale is only 20% of what it takes to get a deal closed. The other 80% is solving problems, knowing the answers to questions before they’re asked and developing a mutual understanding of what’s going to work for all parties involved, he says.
The value of experience in franchise finance is something Pabst knows a thing or two about. Across his nearly 30 years in the franchise finance industry, he has originated, structured, and closed nearly $3 billion in sell-side engagements, loans, and sale-leasebacks (generally M&A related), including three of the largest franchisee transactions ever completed, with each individual deal valued in excess of $150 million.
Pabst is in his eighth year at The Cypress Group, an investment banking firm that helps clients sell, buy and consolidate their restaurant businesses. He followed a fairly typical path into finance, earning a B.S. degree in finance from the Kelley School of Business at Indiana University-Bloomington, graduating in 1986.
One of his first roles was working at a large finance firm where he provided equipment financing to franchisees for various POS manufacturers. “I fell in love with the franchise business and specifically the franchisee customers. Our clients are great. They are typically first-generation wealth. They are generally humble, honest, fair, self-made, loyal. It’s easier when you truly love the people in this industry, and sincerely want what is best for them,” says Pabst.
He also likes their decisiveness. “These are usually founders and sole shareholders. There are no steering committees that select the criteria under which they will evaluate the RFP process for the board. They gather facts, listen to advice, and make decisions quickly,” he says. The Cypress Group also is a hands-on, engaged and entrepreneurial enterprise, notes Pabst. There, he is actively involved with clients at all phases of a transaction.
Today, the aging of franchise owners is providing a steady pipeline of M&A activity. “People who have built significant enterprises are looking at their strategic options, and there are a lot of people who are very interested in the dynamics of the franchised and multi-unit restaurant industry,” says Pabst. Potential buyers like restaurants because they are easy to understand, albeit difficult to execute. Franchised food is uniquely American and has less technology risk as compared to the disruption occurring in other industries, he adds.
There is a deeper buyer pool with more professional money and long-term capital that has interest in the restaurant space, he says. The best advice for sellers is to start the process early. “There are a number of things we can do to help people position their business, sometimes over a number of years, that will help them when they do decide to sell,” he says. For more information, contact Bill Pabst at 847-637-0790 or firstname.lastname@example.org.