The Value of Great Partnerships
[NOTE: As The Riverside Company hosts its Leadership Summit this week, it’s the perfect time to share my recent column on the value that private equity has brought to The Dwyer Group.]
Private Equity Can Help Franchise Businesses Thrive
Published in Franchising World magazine, January 2016
By DINA DWYER-OWENS, Guest columnist
As franchisors, most of us are driven entrepreneurs who pour ourselves into our success. We wisely look at every aspect of our businesses to deliver more value and get the most out of our hard work. We care deeply about success and providing great customer experiences. We want the most from – and for – our employees. We strive to make our companies bigger and better every day. You may be surprised to learn that a great way to accelerate growth might be by finding a private equity partner.
My company, The Dwyer Group, has twice partnered with the same private equity firm, The Riverside Company. Our first interaction with them, a seven-year investment that ended in 2010, went so well for both parties that we were thrilled when they elected to reinvest in Dwyer in 2014. Our partnerships with private equity have driven growth, made us a bigger and better company, embraced our culture and our Code of Values, and expanded the reach of our organization beyond expectations. Here are some of the ways our company’s bottom line and service have been boosted by working with a private equity partner.
Access to capital
Traditional loans and other means to access capital for growth can be particularly challenging even for very well run franchise companies. Even if you get them, bank loans can come with onerous requirements. So where can you turn for the money needed to stay ahead of the competition? The right private equity partner can be a great fit. Most firms will work with owners who are seeking liquidity for their business, but many offer options – including minority ownership – to those who just want to expand their business.
A deep team
We’ve talked about the “equity” part of private equity, but the right firm will deliver much more. A great private equity firm opens doors to a variety of growth opportunities. They’ll work with management teams on shared goals and initiatives, bringing decades of experience to help your business expand. They could deliver expertise in a wide variety of areas, including sales and marketing, pricing, product development, lean manufacturing, and more. Additionally, a global private equity firm can help you access new markets or manufacturing options, providing feet on the ground around the world and international knowledge.
We all want the financial support that comes with private equity partnership, but ultimately we want what’s best for our franchisees and, as a natural extension, our franchising companies as a whole. Outstanding performance with a private equity partner means great things not only for their investors but also for your employees and – most importantly – your customers by creating real and lasting value in the company. As an example, Riverside seeks to double or triple earnings at the companies in which it invests, which means the franchisees can experience great growth as well.
Anatomy of a great deal
When interests are aligned and teams work well together, the results can be amazing. Here’s how we experienced it during Riverside’s first investment period with Dwyer, when our two teams did a number of remarkable things over a nearly eight-year span.
We really transformed the business in terms of scale and capabilities. Riverside supported us in the acquisition of additional franchise brands, helped us improve and expand our corporate headquarters and accelerated growth significantly. Highlights included an add-on acquisition that grew Dwyer’s existing auto glass business, launching the Ground Guys lawn care franchise concept to expand into a new service segment, and strong organic expansion. During the investment, franchisees increased from about 1,100 in 2003 to more than 1,500, nearly doubling royalty revenues and more than doubling EBITDA.
The right private equity partner will bring experience in growing companies, and a franchising company should look for a partner with specific franchising experience to really drive growth. Private equity is not right for every company, but if you’re seeking flexible and timely access to capital and knowledge to supercharge growth at your organization, it might be a great time to see what private equity can do for your company.
Dina Dwyer-Owens is the co-chair of The Dwyer Group and a leading author and speaker about ethics in business. For a copy of her book, visit values-inc.com. You can follow her on Twitter @DinaDwyerOwens and online at dinadwyerowens.com.