What makes BWW an attractive acquisition for Roark

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1. What makes BWW an attractive acquisition for Roark? What makes it a potentially a risky acquisition?

2. What levers can Roark pull to make this an attractive investment? What could thwart its success? In thinking about this issue, please assess the relative benefits and risks of Marcato’s proposal to franchise 90% of BWW.

3. What is the proposed structure (capitalization) and sources and uses of the financing for the transaction?

4. Review the projection assumptions on exhibit 10. Do you think these are reasonable in light of BWW’s recent history? Why or why not?

5. Using the assumptions given in the case Exhibit 10, please project BWW’s free cash
flows (FCFs) and cash available to repay debt (CARD) for years 2018 through 2022,
considering the expected synergies and refinancing program.

6. What internal rate of return (IRR) and cash on cash return can Roark expect from this
investment (assuming a $157 purchase price and Roark finances the transaction using the debt outlined in case Exhibit 12)? Justify your chosen exit multiple for your exit
analysis.

 

Sample Solution

Wings, beer, sports, and now cash. Buffalo Wild Wings Inc., which became a huge name in the casual dining chain industry, was bought out by Roark Capital Group, an Atlanta-based private equity firm that owns Arby`s Jimmy Johns, Cinnabon, and more. With portfolio companies ranging from Cinnabon to Auntie Anne`s, Roark has experience creating and maintaining large multinational brands, and they will be able to apply this experience to the Buffalo Wild Wings chain. Buffalo Wild Wings has an advantage in this market because of its brand recognition and personality, but it must catch up with regards to back-end efficiency and food quality.

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