Season 4 Episode 3: 2021 M&A Deal Reflections and Looking Into 2022



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Welcome to The Restaurant Boiler Room, season four, episode three. I'm your host, Rick Ormsby, Managing Director at Unbridled Capital.

Today in the Boiler Room, we unveil the details and negotiations from two of Unbridled's landmark deals closed in 2021. I also talk about our deal challenges that we are seeing in the marketplace generally for 2022 so far. We will tackle the question, what to do if your buyer wants to walk away or re-trade your deal.

The Restaurant Boiler Room is a one-stop shop for multi-million dollar merger and acquisition activity and financial complexities affecting the franchise restaurant industry. We talk money, deals, valuations, and risk delivered to the front door of franchisees, private equity firms, family offices, large investors, and franchisees on a monthly basis. Feel free to find our content at Unbridled Capital's website at Now, let's enter the boiler room.

Well, hey, glad to be here with you guys today and another episode of The Restaurant Boiler Room. I was just on a cruise a little bit ago and a question came up. I asked my kids this, we got a laugh or two out of it, so I'll ask you too. So, if you were on a cruise ship and you had to dance to one of those cheesy songs, you know what I mean, that they play? Maybe you haven't been on a cruise ship, but would you rather dance A, the Macarena, B, the Cupid Shuffle, C, the Electric Slide, D, none of the above? Oh yeah, and E is the Wobble, have you heard this song? The Wobble's a funny song. There you go, those are your choices.

We had a split vote in our family. I think most people said the Cupid Shuffle, one person said the Wobble, and then one person said the Macarena. It's hilarious. Anyway, random little funny thing there. Okay, as we get going today, I'm just glad you guys have tuned in.

What I want to talk about today is, first, we do Unbridled nominates, thinks of a couple of deals a year that are the deals that we like to highlight at the end of the year. And so, I wanted to explain a couple of those to you, let you have the chance to just listen how they unfolded. We'll do that a little bit.

The 2022 year so far, man, it's been an interesting one with Omicron stepping up and now it's obviously subsided, which is fantastic. I'm glad that's coming behind us now. We're seeing all these mask mandates getting waved and everything else. It took a big chunk out of late December and most of January for the franchise industry and for a lot of our economy.

2022 was going to start slow anyway in my view, after a record setting, 2021 and all these deals and all this M&A activity and all this banking activity happening to try to get under the 2021 year end deadline with the tax policy in place at least till the end of the year, not knowing what would happen this year. Always knew it would advance forward a little bit of the M&A activity and so, we expected the first quarter or the first half of 2022 to be a little bit slower.

I mean, maybe at Unbridled, maybe we were doing so much more business than everybody else relative to what we've done in the past that we have a little bit of a microcosm view that may not fully reflect how the overall market's trending, especially as you back out of franchises and restaurants. But inside this little industry, what I see is that, a little slow start to 2022 because of Omicron. A little slow start to 2022 because of some of the activity in 2021 that closed, that created a little bit of a vacuum.

Then, we have a little bit of inflation news that's been challenging to us, both on the labor and on the commodity side. Actually, quite eye popping there, it's forcing operators to look at their P1 and P2 financials over last the year and I think say, "It's time to raise prices again." We've got to look at trying to keep our business as profitable as it was last year and implement some new labor things. Some new food cost things, some new promotions from the franchisor, maybe delay some remodeling. Weather's been a little bit of a factor throughout the Midwest and Northeast too.

So, all that to say, I think this end of the first quarter and into the second quarter of 2022, here it's going to pick up a little bit. There is going to be in my view, a little bit of a time where there's got to be a little comeuppance here on valuations. I mean, we've been riding this enormous wave of high values and high EBIDA multiples and COVID sales and profits. In some cases, they're sustainable. In some cases, they were a little higher than what the normalized sales are going to be going forward. That's a market by market, state by state, brand by brand, deal by deal type of thing.

But overall, there was going to be a little bit of a comeuppance and a little bit of challenge to valuations in 2022. I think we're starting to see it. I don't talk to any bankers who are overly negative, at least not in writing, but I think the sentiment is out there now amongst the lending community and the franchise side. That underwriters for a lot of these larger shops are going to be a little more selective in 2022, as they see the comp pressure and then they see some of the bottom line EBIDA margin degradation if there is any in some of these brands.

Expect that a little bit as we go into 2022. I tell people, I was just telling a guy on our team last night, M&A activity is, I don't know, it's busy and active when things are great, when the economy and the environment and the clients that we serve are doing really well, M&A is awesome, a lot of it. When things are really bad, you know what I mean? There's typically a lot of M&A too.

The M&A, that type of stuff is not as fun to do because you've got pressure and there's usually banks involved. Maybe there's write offs and bankruptcies and angry negotiations and prices are lower than what you'd want them to be. So that kind of work is not the easiest or maybe the most fun, but there's usually a lot of it when times are really bad.

Then, like anything, people who buy things, some people like to buy things that are dented and beat up and have hickeys and warts on them. Other people like to buy things like buying a Ferrari at the top speed. So, those two timeframes typically have a lot of deal flow. It's usually when you're in a transitionary period where deal flow and the environment is a little bit more difficult. It's usually, especially when you're on the down swing, in the middle of a little bit of a down swing.

That's maybe what we're seeing in 2022 as we start the year is that, we're lapping over really high sales. We're swallowing some of these commodity cost increases. We have more buyers than sellers at the moment, but still we have fewer buyers than we did last year, because a lot of the buyers have their coffers full with new acquisitions that they're doing. I mean, it is also true that the franchisor is sticking their neck in some of these transactions more.

For those of you who haven't listened to a lot of the podcast, I'll just tell you, I used to work at Yum! Brands Corporate and so, I came from the franchisor side maybe 20 years ago almost, and so great respect for the franchisor. Most of the time over my professional career doing this, doing deals, the franchisor has largely been somewhat silent. They don't get involved too much across the multitude of brands in the M&A process. Other than to approve or disapprove the buyer that wants to buy the assets being sold.

But now, I'm seeing, our company at least has seen it across multiple brands, I'm thinking at least four brands that we've been involved in the last six months have seen franchisors getting involved in the transaction. Exercising the right of first refusal or playing a bigger role than we'd expect from past dealings, so that's a change that produces a little bit of a challenge too.

I think we just got to watch for this soft landing. I think the soft landing happens sometime this summer, hopefully. I'm a little worried about what happens to interest rates, man. So, what are you guys and gals reading in the tea leaves, right? We're looking at maybe three or four interest rate hikes this year, that'll affect borrowing a little bit. But overall, good businesses will continue to sell and sell at great prices.

There's going to be one of these phenomenons that there always is where the cream rises to the top. So, if you have the best business in a good brand and you decide to sell it, and there aren't that many other transactions on the market, you should still expect to get great pricing, great EBIDA multiples and great interest in your business. If you are an average business, all the way up to a really good business in a brand that's just kicking butt, one of the best brands out there, expect that to still have great interest, great response, great pricing, great options, all that stuff if you're going to sell a company.

I think where you start to see the change is where you have some of these brands that have just done okay. Or the business is okay in a brand that's okay. Those kind of businesses are, I think, going to see a little bit of a challenge to do M&A work, and also to borrow money or to recap their companies this year. So, be patient, it is important if you're an operator listening to this podcast, I'd say, man, if you're looking to borrow money, if you're buying out a partner, if you're recapping your business, if you're borrowing for an acquisition or whatever you're trying to do, you're going to have to probably widen your search if you're looking for capital, especially, debt capital.

The sale lease back market still seems to be really strong, I don't see much change there. I think REEITS are still in play in a big way. You've got the 1031 buyers, they're still crazy. A lot of them out in California. Everyone always asks me like, "Why are all the buyers out in California for real estate?" And I say in response, "Where else do you see 13% state income tax rates?"

If you're at the top tax bracket in California and you're paying 40%, roughly 41.6 or whatever the number is with Obamacare and you're paying 13.3 or whatever the number is for the State of California and you add all that stuff together. I mean, I ain't the brightest guy in the world, but that's 44% or 54% on your taxes, so you see less than half the money that you make.

Well, that drives people to put money in real estate and then to do tax deferred 1031 exchanges. Then, typically then what you see is these California investors will try to buy in like Texas. Buy a bunch of properties in Texas and then all of a sudden, guess what happens? They move to Texas, so it's an interesting thing.

By the way, I see why people move to Texas, any of you who listen from Texas. I was there last week, driving through. My daughter is looking at Baylor for a university, what an awesome school that is. You can just see all the progress. It's amazing what's going on in Dallas and Houston and Austin. Those cities are just absolutely growing. Anyway, that's what we see on the real estate side.

All right, so a couple of deals. So far in 2022, we've had a couple closings, have a Burger King closing. We sold some Wingstops, interesting. First, foray into the Wingstop side of the world and wow, that brand has really come a long way. I just say kudos to the Wingstop brand. Goodness gracious. They've got some great promotions.

Wing prices are crazy, but they've got some really strong sales volumes. Their dollar per square foot if you track it this way, I mean the amount of money that they generate for the square footage in some of these small Wingstop locations is incredible. I mean, it's absolutely incredible. I know that franchise base within that brand is a little bit fragmented with smaller operators. And so, that's a challenge for someone coming in with a platform investment and a brand like that. But I got to say, you get into the Wingstop brand, they're on a run.

The way it's been explained to me in that brand is you get in, you just get in and you just deal with the wing prices. Sometimes the wing prices are really, really high and you don't make any money and other times wing prices dip really low, and then you make a ton of money. You just ride it like you would the stock market as you operate the stores, which I think is an interesting phenomenon that you don't see people thinking about as much. Or you see people thinking more about hedging the inflation of costs. But with the wings, it's just a crazy up and down market of buying and selling. Wing prices are crazy sometimes.

If I just take you through a couple of these deals, the first one, Unbridled, we feel like two deals stood out for us last year. I mean, we did 33 transactions last year, I think and we're blessed to have really had an awesome year, historic year for our company. One of the two transactions I'd just like to talk about a little bit was, we were involved on the buy side, helping a group called Mas Restaurant Group acquire 36 Taco Bells in the Columbus, Ohio area, which is a neat transaction for us.

Mas Restaurant Groups was backed by Bessemer. Bessemer is one of the larger family offices in the world and they are a prominent Taco Bell franchisee, and a great company and so is Mas Restaurant Group. Mas, they got into the Taco Bell system through the Houston market, owned and operate rough numbers between 75 and 100 stores down there. They were looking to broaden and grow. They called us and we helped them get into longtime friend of mine in Columbus who'd operated for 40 years in the Taco Bell system. We'd been good friends and we helped them expand into his market and buy his stores and now they're in two major DMAs across the country.

I think there are just a lot of interesting... It was a large transaction by Dollar Volume, which is good, but I just think it was a great management team with Mas Restaurant Group. They wanted to expand and create more opportunity for their employees, and to grow their company for their investors and for what they're doing. And so, it was just a pretty good transition. Went pretty smoothly. The support systems of both companies were really strong. Their relationships were good throughout the transaction.

I mean, your granddad or your grandmother or something told you this when you were growing up. They patted you on the head and they said, "You got to have trust and do what you say you're going to do and never break a promise." These simple axioms that you hear as a kid and you're like, "Whatever. Okay granddad," but those things matter, don't they?

The thing about trust, I mean, it just goes a long way in making for a successful transaction, and that's the way that I work in my personal and professional life. It's like, I deal with people. Sometimes I'll make a mistake, but in most occasions, I deal with people that I trust. I've developed over the years, as you probably have too, a sixth sense to know who you feel like you can trust and who you don't feel like you can trust.

In this particular transaction, it was basically a handshake between the two parties and then off to the races to go through all the details and negotiations of selling a big company from one organization to another. But trust was the main reason why it happened and I think both of the principles of each of these two companies, the buyer and the seller, trusted each other, trusted their operating history and the way they had worked with one another before and known each other through various committees and things like that. And so, that transaction was a good one. I want to give a kudos out to Derek Ball and our company for leading that transaction, so that was one that I was really pleased for.

Then, towards the end of last year, the second deal that I wanted to highlight is a 90-unit KFC business, actually 75 KFCs and 15 KFC Taco Bell multi-brand. So it was 90 units, it's a big valuation and the seller was Fowler Foods out of Arkansas, but they owned in eight different states, including all the way down to Jacksonville, Florida, my new home, State of Florida, whoop, whoop. Then, the buyer was Tasty Chick'n, a subsidiary of Tasty Restaurant Group. Tasty has bought a couple hundred Pizza Huts, some through us. We've sold them some Dunkin's over the years.

They're from Beverly Hills and they got into the franchise space by buying Burger King restaurants maybe I'm going to say 2018. So they've really become, I'm guessing now with this acquisition of Fowler Foods, maybe one of the top three or four or five franchisees in the United States by size in the course of three and a half years. So, it's pretty impressive growth for them.

So, this was an asset sale. It was a family business, the Fowler family business. The Fowlers have been attached to KFC for 58 years and they bought and sold some stores over the years, but this was the first time that they had a full exit of the KFC system. I mean, the transaction was a little bit crazy. When you sell a company that size, eight states, 90 restaurants, lots of moving parts, tons of employees, lots of negotiations. You're selling to a private equity group that's got requirements of their own to buy a company like that like most private equity groups do, you do things like significant due diligence. You do quality of earning studies. You look at the assets that you're going to acquire and get a feel of whether you're comfortable with those assets in the state of their condition. That was a part of it.

The deal had to close by the end of 2021, it was important for the seller and he didn't want to drag it into 2022, not knowing if any tax legislation would change. Then retroactively he'd have to pay more taxes on his sale than he otherwise would. I mean, that was a concern of mine too. Sometimes these tax deadlines or there's a line in the sand that causes a deal to go faster. Obviously it puts a lot of pressure at the end of the year.

In this particular case, we were able to pull it off. I thought it was going to happen before Christmas and it happened right at Christmas time, so we were going all the way to almost the very end of the year. I think I've said this on a prior podcast or two, but once you got into a really compressed timeline, you have these third party folks who are involved and have to get a deal done. A lot of people forget about them or they don't get involved in the transaction until it's like 60 days left you think about these people.

Crazy things as you don't think about, like the franchisor has to issue new store numbers and those store numbers, you're like, "Oh, okay, well, we can get new store numbers in these darn restaurants in the last week before the transaction closes and it'll be all good." But it doesn't work that way because the store numbers have to be programmed into the computer systems that have to be downloaded onto the franchisor platform. Then, it has to be sprayed out to the stores and the suppliers and everything else. And so, just the changing of the store numbers, usually precipitates at like a 45-day hold period or at least 30 days.

You've got things like appraisers, environmental reports and diligence providers and lease assignments. You have these professionals like attorneys and CPAs and lenders and all these other constituents involved in the transaction that have to come to the table to make a deal happen. They're all pressed for time with other deals and other pressure for the end of the year, so that happened here.

Clearly the last deal I talked about, the Taco Bell deal happened in the middle of the year in June, so it didn't have those pressures, but this one, this one did. One of the exciting things about this is, there's not too many 90-unit KFC businesses in the country. I mean, our company sold a big KFC business of this size a couple years back. There's only probably only five or six franchisees that are larger than this in the KFC system, maybe six or seven, I'm losing track at the moment. But the point holds that it's a pretty big platform deal and it was one of the only new, large private equity family office franchisees to come into that brand in a long time.

I mean, there's been one big consolidator in that brand, which is a great company that they've done a great job and they've grown and they're enormous. They've been patient and faithful and been good for the system. But otherwise, it's been like, if there's two or three or four KFCs, it gets sold to either that big consolidator or somebody nearby who's a neighboring franchisee. Now, we've brought three new private equity or family office or buyers into the KFC system as an example, this being the third one, Tasty Restaurant Group.

It changes the complexion of what the future of this brand will look like. Different brands are under different life cycles, so in some brands... I'll just throw some examples at you. Pizza Hut for example, was a brand that has like 95 franchisees with average of 60 units each, so that was always like a closely held brand of small numbers of franchisees with large unit accounts. You had the Colonel with KFC who would drive around in his Studebaker and would make deals with little hotel owners on the side of roads. It was like a nickel a head of chicken. They'd pay him as a franchise, as royalties something like this and he would give territories haphazardly to small operators in towns.

And so, that brand grew a lot differently. It grew with the average franchisee like I say, looking like American Gothic, the painting, American Gothic. You know the old dude with the pitch fork and the bib overalls on and his wife next to him with the little cornfield and the house in the background? That's how the KFC community started and so, those are two extreme examples. Most examples are somewhere in between.

The age of the brand is another interesting thing, so we talked to about Wingstop a little a minute ago, and that brand's not as old. It's really come into play and really come on strong in the last six or seven or eight years. Primarily, it's been around longer than that, but that kind of a brand may have the American Gothic, KFC background, but it's just newer and younger. So, the type of franchisees that are in it or not don't necessarily look or act or feel like that, but they're still smaller in scale. Very much entrepreneurs and small business owners in their towns that they operate, so you see all kinds of different types of franchise makeups.

I guess the point for this particular deal is, bringing in a large outside group to make a significant investment in the KFC system is a exciting thing to see, because it will mean that the KFC system grows up a little bit in its franchisee base. A little bit more, a little bit more, a little bit more, and others are doing the same and will continue to do the same through the next cycle, whatever the next cycle will be. I hope it's not with the stress across these brands in the next couple years, but the consolidation trend will likely continue.

What would I tell you anything else about this particular deal? When you're integrating a new software system, a new payroll system, a new back of the house system, you have parties in this deal agreed to short-term transitional service agreements. So that, at the day of closing, you don't have the seller just walking away and the buyer trying to swallow all these new services and all these new programs and things, so that was something that we put in place in this type of a transaction.

You see that on larger transactions, especially when you have a company like Tasty that owns in what, three different brands over here to the left and over to the right none of them are KFC. So, when you merge them all together, the systems don't talk together at the highest level. It requires time post closing to integrate the acquisition so that everything works properly.

Those are the two kind of transactions that we pointed out this year, that we're pretty proud of. 136 Taco Bells in Columbus, Ohio, and the other 90 KFCs in eight state region out of Jonesboro, Arkansas.

All right, so I'm just looking at my little yellow pad here, all these notes scratched out. Some of it's like what I'm going to do this year like a New Year's resolutions and I've already blown all of those. I don't know how you're feeling about your New Year's resolutions at this point, but I'm looking at ones I've scratched out. I guess I've already blown it guys. I'm looking here at what to do. I just had this question written down, what to do if your buyer walks away or wants to re-trade. I thought it would be something to talk about for a few minutes.

For transactions that are going on right now, especially when you have... I'm not saying this is happening in every brand, in every situation, but it is happening in some, where you had a bad January and a bad February because we talked about it earlier. Either you're rolling over really big numbers or Omicron really hurt your business, or you had a temporary blip in lower EBITDA, because you were unable to increase prices on your asset, on your food or on your products, but higher costs enter into the business. For all these reasons, someone could be in the middle of a transaction, a buyer and seller could have made a price and agreed to pricing and terms. They even could have gone through an LOI process, signed a purchase agreement with one another. Submitted it to corporate for right of first refusal and whatever brand that we're talking about. Now, there's a 45 or 60-day due diligence window.

During that window, there's a quality of earning study let's just say, where the buyer is hiring an independent third party to come in and take a look at the quality of the financials. To give them a read on the quality of the financials in order that they can part of their charter with their family office or private equity group, they have to have that. Or maybe they do it for a level of comfort for their investors and a level of security. But whatever the reason, there's all this stuff that's happening during the due diligence phase.

What happens if during the due diligence phase sales and profits are going down? Well, in most cases, if the decline is nominal, even if the trend is down, but the decline are still around what you were last year or slightly below what you were last year or there's an explanation, then usually buyers and sellers typically are okay with that and they work it out.

In some cases where there is a couple of periods of really poor performance, but the seller, for example, didn't raise prices quickly enough, but there was a plan to say, "Hey, this is temporary. We're going to raise prices by 3%. We expect it to stick at 90% and that's going to cover all the inflation that you're seeing in the P&L and our EBITDA will come back to normal and our sales should be back to normal too," those can be understood and usually accepted, depends on the circumstance.

But if you're in a situation where January this year, you're down 15 over January of last year, that's a difficult situation to be in because in this particular environment, most of us would say, "I suspect that's a short term blip." Most of us in this world had Omicron in the last month, so I think I saw a stat that said 73% of America or something of that nature had Omicron, whether they knew it or not, so basically everyone had it.

And so, we suspect that sales are down in January because people are not leaving the house as much and they're just locked down a little bit. We also suspect that, there were some changes in our economy, things were thawing and it was a difficult temperature and weather depending on where you live. But the buyer is saying to themselves or it's saying to the seller, "You're down an incredible amount in sales and profits and we think this is going to continue. We are no longer in for this deal at the price that we initially proposed to you." So, what do you do in that situation?

Hasn't happened a whole lot in the last year and a half, but I think we're all going to be faced with this situation a little bit more going forward. I tell people, I've been successfully and happily married for 20 some odd years. But I've heard people say that, if they're in the middle of a friend or a family member that's about to break up, the marriage is about to break up, what they push for is a separation before a divorce. I don't know if that's good advice or not, but that's what I hear a lot of.

Don't just call it quits but instead let's separate. You go live in this apartment, I go live in this apartment and let's go work it out, something like that. Let's create a little bit of time and let's revisit things and let's not let emotions get high and make any bad decisions.

So that's the first principle that I usually employ when we talk about these deals is, to whether it's short-term or not, if there is a change, a material change in sales and profitability during a deal, and then usually have a lender who looks at it and says, "Whoa is me. I can't lend you what I was going to lend you on this deal, because the financials have changed and we're scared," then what typically happens or what we typically recommend is that, we separate, don't divorce.

Let's create a little more time in the deal, especially if there's good faith between the buyer and seller. Let's watch and see if this trend is temporary. If it's temporary and explainable, then there should be no issue. If it's not temporary and can't be explained, then we may have to come back to the table and talk about adjusting pricing and terms. Then, at that point, you could have a buyer and seller that don't come to terms, so that's the way I traditionally think about it.

You have to have a good buyer and a good seller in every case, because if you don't have good faith between the parties up to that point in the deal, certainly you're not going to be able to get through a situation where sales are down materially and the buyer and seller don't know what to do. The seller doesn't want to take a price cut, the buyer doesn't want to pay the same price, and we're not sure what's going to happen to the P&L going forward.

So the first thing you got to have is, you got to have goodwill in a deal. I tell people too, when this time comes up, if it does, you don't want to try to win every little aspect of the deal that you're involved in. I see, especially rookies, first timers or second timers come into these transactions and try to win on every point. Throughout the negotiation of buying $100 million franchise business with a ton of units across the country, okay, there are going to be 100 things that have to be negotiated.

Our company's done hundreds and hundreds of deals like this and so, I could put 50 of them on a page and say, these are the most common, but there's always something new. Every single time there's always something new that's negotiated that you didn't know about, that came up, that wasn't considered, change in circumstance, whatever it is.

You don't want to try, especially, if you're both sides of a transaction, you don't want to try to win every point. Because at some point down the line, I mean, it has to be a good deal for everybody and at some point down the line, you need to have presented yourself throughout a transaction in a reasonable way, so that if there is a bigger issue that comes later during the due diligence process, there's enough trust between the parties and enough of a good relationship between the parties that it can be worked out amicably. If that's not there or if there's fatigue leading up to that spot, then that negotiation usually fails and the deal falls apart, which ultimately hurts both parties.

I mean, the buyer is typically at this stage, invested in the deal, depending on the size of the deal. Has spent between 20,000 and $500,000 in diligence costs, it's not immaterial. The seller has also exposed themselves and their employees and the confidentiality of their company and all their time and distraction from operating the business to helping to sell it. They've got all that time and cost and effort into it too. So the trust factor and the goodwill factor is so important.

I would say this, I think as we move into 2022, I'm of the opinion that, people are going to have to be okay not getting the same price they got in June of 2021. I mean, I know in a lot of these residential home markets, for example, you're still multiple bids and prices of houses are going through the roof in certain markets. In other markets, properties are sitting and prices might be flattening.

You had the same thing going with franchise businesses, but you just need to be cognizant of the fact that maybe things might be coming down a little bit in 2022, and that's not a bad thing. If you were at 50 million and now the valuation, eight months later, you thought you heard your neighbor sold for this incredible price. But now this 50 million valuation really in today's numbers is 47 or 46 million, which could be like a seven, five to 7% drop from where it was at its peak, you got to be okay with that.

You got to be okay with that and you got to say to yourself, "I might have missed the absolute peak, but that's okay. I'm still," in this example, "at $43 million. I'm still $10 million or $8 million above the 10-year trend of the value of my business. I take what I have on the table. I sell based on a long-term vision that I had when I started operating the company, and I'm okay if I'm just a little bit past the curve. I act responsibly and reasonably during the process, because what happened in mid 2021 may not be there at the same price in 2022 if my business has changed, or if the conditions have changed." Hope that makes sense.

These things are delicate and the last thing I guess I'll say is, after all these years, I've seen some pretty emotional things, man. I like the analogy of basketball, but the really good operators, if you're a really good operator, you work with a lot of discipline in your business. But then you have that little extra something of emotionality to make the decision, to make these really important decisions at the last minute.

Selling your company, taking a certain price, making a concession, thinking about buying into a company, what company? Am I going to go into all this crazy debt to do this? All these decisions, so I liken it to like Michael Jordan, the way he used to practice. Come to practice, you run and you play hard and practice so that you know all the plays. You know how to do the motion offense, pass and screen away. You know how to run the triangle offense that he had with Phil Jackson, wasn't that awesome? Then, of course, he took it with Kobe and Shaq and passed in with Kobe in LA. Or you have any other kind of offense, dribble drive offense that coach Calipari, Kentucky was famous for implementing.

You have all these different types of offenses, but you learn them and you practice them and you strategize and you learn every angle and every maneuver out of every one of them. Then, you know the plan, but then that enables you to be free in the last moment when you have to make a last second shot. That's what I see with a lot of the successful operators. They manage their business very faithfully on a day-to-day basis. They treat their employees very well. They're in tune with their individual markets. They've got good advisors around them. They're very disciplined. They're blocking and tackling. They're doing everything they're doing to make money every day and this franchise business is a day by day, minute by minute business.

Then, when the time comes to do something crazy, hit the last second shot and win the championship, they can do it. They're prepared to do it. They're so prepared so that they can be emotional in the moment and make the right decision on a dime. That's the way you see some of these transactions unfolding.

I do think next time we see you around, I'm going to do a Q1 update and we'll talk a little bit more about the state of the market. Another month will be a good thing so that we can figure out where things are going. You hear a little bit difference in my voice this year and it's because again, I think it's going to be a little more of a prudent market of buying and selling things. It's going to be a little more cautious for the first quarter in the first half of this year.

Hang in there, deal flow will come up again. I do worry, don't you all about some of this Ukraine, Russia stuff? It seems geopolitically we're in a bit of a quagmire right now. The stock markets dropped quite a bit this year so far, so let's hope things get leveled out by the springtime. There's great businesses out there to buy and sell, franchise business continues to be a fantastic place to be.

Watch out again for the casual dining opportunities that are going to be coming out probably in the next couple two or three months. So, if you are wanting to be a consolidator at a relatively inexpensive price for casual dining companies, franchise casual dining companies.

Also, health and beauty, you're going to see your opportunities come up because those types of companies, as I've said in the past, haven't had an avenue to sell in the last couple of years because the revenues were down because of COVID restrictions across the country. So, keep your eye out for that and I look forward to talking with you guys again and be good. Take care.

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