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Restructuring/Recapitalization
Auspex Capital has a very active practice advising owners of troubled restaurant businesses and Auspex Capital's principals all have very extensive backgrounds in recapitalizations and debt restructures for restaurant companies. The key to a successful restructure is to develop and implement strategies that preserve shareholder value and that expedite this typically very painful process. Auspex Capital’s approach is to divide the restructure process into three components: Assessment, Strategy Development, and Execution:
1. Assessment
- Ground up financial analysis
- Unit level viability analysis
- Sales, transaction count and average ticket review
- Expense ratio trend analysis
- Peer group/system average comparisons
- Lease and franchise agreement review
- Overhead expense review
- Capex needs analysis
- Review of capital structure/debt schedule
- Assessment of management teams strengths and weaknesses
2. Strategy Development
- Is the business viable?
- Diagnose the problem and get management’s concurrence
- Does the business have both near and long term viability?
- Is a bankruptcy filing necessary? If so, can the company emerge?
- What is management willing to do?
- What changes to management need to be made?
- What are the operational issues that need to be changed?
- Which units need to close?
- What needs to be done to right size overhead?
- Is the franchisor supportive of the management team/ownership group?
- Are there realistic remedies for the flawed capital structure?
- Are impaired lenders willing to cooperate?
- How will compromised landlords be handled?
3. Execution
- Prepare and distribute a comprehensive Information Memorandum
- Meet with each constituent to discuss the situation and present the plan
- Prepare a detailed term sheet outlining concessions required of each impacted party and benefits that will be derived from participation
- Negotiate and document a consensual restructure agreement
- Make sure that there is a back-up plan (or two) in place for each constituent
Deal History - Restructure/Recapitalization
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