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May 20, 2021 - Roark Capital is making another sweet deal. This time, the sprawling private equity firm acquired Nothing Bundt Cakes, its 29th restaurant acquisition and its 92nd franchise or multi-location brand investment.
Terms of the deal were not disclosed, but anonymous chatter in the deal community says the company outbid other investors by a wide margin. Rumor has it, the price was more than 20 times earnings. While it's impossible to measure the price compared to other potential buyers, that does match Roark's willingness to pay a premium for brands that fit its investment thesis. It did the same with Dunkin' Brands, in October 2020, paying $11.3 billion, a 20 percent premium compared to the latest share price for the company.
Inspire Brands CFO David Pipes explained the premium for Dunkin' as a smart investment for the overall Inspire Group, which Roark formed in 2018.
"There are a lot of things we benefit from" beyond the magnitude of the sales. "They provide things we weren't necessarily the best at before. Think of things like the international side. Before, Inspire Brands was 2 percent international, but with Dunkin, it takes us to 29 percent," Pipes told Franchise Times' Beth Ewen after the sale. "It opens the door for further expansion internationally, but not just of Dunkin' and Baskin-Robbins, but they clearly have the better infrastructure."