M&A Trends (Pre-COVID-19) Point To 2020 as a Busy Year for Deals

As we enter a new year and decade, expect macro M&A trends from the past few years to continue. The year already began strong with new deals announced for several large brands and franchisees, with more to come. In addition to restaurant transactions, expect the pace of franchise transactions outside the food space to accelerate as franchisees continue to look for opportunities to expand and diversify.

7 reasons

The rate and pace of franchise resales and consolidation is expected to continue in 2020, primarily because of these factors:

1. aging franchisees
2. continued focus on asset-light refranchising initiatives
3. increased complexity and capital required to run the business
4. strong valuations (liquidity alternatives are plentiful)
5. macro-economic pressures, including a looming recession and a tight labor market that will create a difficult operating environment)
6. a strong, diverse, well-capitalized buyer pool, including traditional operators, family offices, and private equity competing for acquisition opportunities
7. the transition of family-owned franchise groups from the first generation to the next, with more outright sales and partial buyouts of partners and family members as owners, look to transition their business.

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