The Charlotte Observer reported earlier today that the North Carolina-based private equity firm, which acquired its stake in 2007, is examining strategic alternatives. In this market, selling its stake in Bojangles’ would likely represent a substantial success for Falfurrias’ first fund, a $100 million vehicle.
Interested parties include Wellspring Capital Management and Sun Capital. One source told peHUB that the restaurant chain’s initial investors — high-net worth families that continue to maintain a minority stake — will likely not choose to exit.
“A sale isn’t necessarily imminent, but the process is,” the source said, adding that it is likely that a financial sponsor will step in, rather than a strategic bidder.
Another source told peHUB’s Luisa Beltran that Bojangles is worth about 7x EBITDA (based on category and geography). EBITDA was in the mid-$20 million range a couple of years ago. “Maybe it’s worth up over $30 million now,” the second source said.
An exit would come at a great time for Falfurrias. Last year, I reported at themiddlemarket.com that Falfurrias would seek to double its first fund in its second outing and aimed to collect $200 million from its next batch of LPs. In 2009, Bojangles’ refinanced with $70 million in debt from Bank of America, Wells Fargo, BB&T and Regions Bank.
Sun and Wellspring representatives weren’t immediately available for comment.
Luisa Beltran contributed to this report.