2014 Franchise Times Dealmakers

Auspex Capital saves El Rancho sale with fast switch to MUY

 Auspex was recognized as one of Franchise Times’ 2014 Dealmakers of the Year for this transaction – one of “the daring dozen who move the money that build empires.”

Auspex Capital was just one week away from closing the sale of El Rancho Foods, a 76-unit Taco Bell franchisee in the Northeast, to Sentinel Capital Partners—when the deal blew up.

It happens all the time in the mergers and acquisitions business, but never so late in the game in Auspex’s experience, and El Rancho’s owners had to wrap things up by year-end. So Auspex quickly turned to a long-time client, MUY Brands, operated by Jim Bodenstedt in Texas, and convinced him to take a look at the $80 million deal.

Auspex raised the capital to fund the deal, including securing new senior debt from GE Capital Franchise Finance, and at the same time sold three companies for MUY—shedding two brands Bodenstedt viewed as low growth (Long John Silver’s and KFC) and trading up to the high-growth Taco Bell brand with geographic diversity.
“We were able to quickly change gears and find a new horse,” says Chris Kelleher, managing partner at Auspex, because Bodenstedt trusted them and was able to say, “OK, I’m not going to spend a whole bunch of time going through this; I’m going to trust the representation made by the sell-side broker.”

Sentinel walked away from the deal November 2, 2012. MUY entered the picture November 3 and “needed to not only close a 76-store deal including 23 properties in about six weeks, but also complete the divestiture of three separate businesses to raise the equity to do the deal,” Kelleher recalls.

“It was a lot to get done in less than 60 days,” Kelleher says, and he credits the speed to “lots of hard work and experienced dealmakers at all levels of the transactions.”

Such confidence comes in part from careful analysis, an Auspex hallmark. “We’re not a flashy group. You kind of get what you get,” Kelleher says. “We pride ourselves on doing deep financial analysis and that creates a level of confidence. They know that we’ve thought through all of this.”

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