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| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | | |
| | | | D-1 | | | |
| | | | E-1 | | | |
| | | | F-1 | | |
| | |
EV / FY2023E
EBITDA Multiples |
| |
EV / FY2024P
EBITDA Multiples |
| ||||||||||||||||||||||||||||||
| | |
Low
|
| |
High
|
| |
Median
|
| |
Low
|
| |
High
|
| |
Median
|
| ||||||||||||||||||
Pet Retail
|
| | | | 7.8x | | | | | | 10.2x | | | | | | 8.8x | | | | | | 7.2x | | | | | | 9.1x | | | | | | 8.3x | | |
Home and Furniture
|
| | | | 3.3x | | | | | | 9.8x | | | | | | 5.3x | | | | | | 3.0x | | | | | | 9.0x | | | | | | 5.2x | | |
Beauty, Health and Wellness
|
| | | | 4.9x | | | | | | 13.3x | | | | | | 7.4x | | | | | | 4.6x | | | | | | 12.8x | | | | | | 6.8x | | |
Finance Drive Retail
|
| | | | 3.9x | | | | | | 12.4x | | | | | | 7.7x | | | | | | 3.4x | | | | | | 7.3x | | | | | | 5.3x | | |
Specialty Retail
|
| | | | 3.4x | | | | | | 8.7x | | | | | | 5.4x | | | | | | 3.1x | | | | | | 6.4x | | | | | | 4.9x | | |
Unit-Based Education
|
| | | | 6.5x | | | | | | 17.5x | | | | | | 9.1x | | | | | | 5.4x | | | | | | 14.8x | | | | | | 8.1x | | |
Hybrid Franchisors
|
| | | | 6.5x | | | | | | 24.4x | | | | | | 11.7x | | | | | | 5.8x | | | | | | 21.1x | | | | | | 10.7x | | |
| | | |
Mean
|
| |
Median
|
| |
Weighted
Median* |
| |
Mean
|
| |
Median
|
| |
Weighted
Median* |
| ||||||||||||||||||
|
Overall
|
| | | | 8.1x | | | | | | 7.4x | | | | | | 7.8x | | | | | | 7.3x | | | | | | 6.6x | | | | | | 7.2x | | |
|
Date Announced
|
| |
Target
|
| |
Acquiror
|
|
| Pet Retail | | | | | | | |
| January 2021 | | |
Pet Supplies Plus
|
| |
Franchise Group, Inc.
|
|
| November 2018 | | |
Greencross
|
| |
TPG Capital
|
|
| Home and Furniture | | | | | | | |
| May 2023 | | |
Mattress Firm Group Inc.
|
| |
Tempur Sealy International, Inc.
|
|
| January 2022 | | |
Mattress Warehouse, LLC
|
| |
Wynnchurch Capital, L.P.
|
|
| November 2021 | | |
W.S. Badcock Corporation
|
| |
Franchise Group, Inc.
|
|
| November 2021 | | |
Casper Sleep Inc.
|
| |
Durational Capital Management LP
|
|
| May 2021 | | |
At Home Group Inc.
|
| |
Hellman & Friedman
|
|
| May 2021 | | |
Dreams
|
| |
Tempur Sealy International, Inc.
|
|
| December 2019 | | |
American Freight Group, Inc.
|
| |
Franchise Group, Inc.
|
|
| January 2017 | | |
Art Van Furniture
|
| |
Thomas H. Lee Partners
|
|
| Beauty, Health and Wellness | | | | | | | |
| June 2020 | | |
GNC Holdings LLC
|
| |
Harbin Pharmaceutical Group Holding
Co., Ltd |
|
| August 2019 | | |
Vitamin Shoppe, Inc.
|
| |
Franchise Group, Inc.
|
|
|
Date Announced
|
| |
Target
|
| |
Acquiror
|
|
| June 2017 | | |
Whole Foods Market Inc.
|
| |
Amazon.com Inc.
|
|
| June 2017 | | |
The Body Shop
|
| |
Natura Cosmetics S.A.
|
|
| Finance Driven Retail | | | | | | | |
| December 2021 | | |
American First Finance
|
| |
FirstCash Holdings, Inc.
|
|
| December 2020 | | |
Acima Holdings
|
| |
Rent-a-Center, Inc.
|
|
| Specialty Retail | | | | | | | |
| October 2023 | | |
Diamonds Direct USA Inc.
|
| |
Signet Jewelers Limited
|
|
| April 2022 | | |
BrandsMart U.S.A.
|
| |
The Aaron’s Company, Inc.
|
|
| April 2021 | | |
West Marine
|
| |
L Catterton
|
|
| March 2021 | | |
The Michaels Companies, Inc.
|
| |
Apollo Global Management, Inc.
|
|
| December 2020 | | |
Sportsman’s Warehouse
Holdings, Inc. |
| |
Great Outdoors Group, LLC
|
|
| September 2020 | | |
J.C. Penney Company, Inc.
|
| |
Brookfield Property Group / Simon
Property Group |
|
| August 2019 | | |
Party City (Canada)
|
| |
Canadian Tire Corporation
|
|
| June 2019 | | |
Barnes & Noble, Inc.
|
| |
Elliott Management Advisors
|
|
| April 2019 | | |
Smart and Final Stores, Inc.
|
| |
Apollo Global Management, Inc.
|
|
| October 2018 | | |
Marshall Retail Group
|
| |
WH Smith plc
|
|
| June 2017 | | |
Staples, Inc.
|
| |
Sycamore Partners
|
|
| April 2017 | | |
Cabela’s Incorporated
|
| |
Bass Pro Shops
|
|
| January 2017 | | |
Leslie’s Holdings, Inc.
|
| |
L Catterton
|
|
| Unit Based Education | | | | | | | |
| June 2022 | | |
Goddard Systems, Inc.
|
| |
Sycamore Partners
|
|
| February 2022 | | |
Houghton Mifflin Harcourt
Company |
| |
Veritas Capital
|
|
| February 2022 | | |
Mathnasium
|
| |
Roark Capital
|
|
| October 2021 | | |
Lakeshore Learning Materials,
LLC |
| |
Leonard Green & Partners, L.P.
|
|
| | |
EV/LTM Adjusted EBITDA Multiples
|
| |||||||||||||||||||||||||||
| | |
Low
|
| |
High
|
| |
Median
|
| |
Mean
|
| |
Weighted
Median* |
| |||||||||||||||
EV/LTM EBITDA
|
| | | | 3.8x | | | | | | 22.0x | | | | | | 8.3x | | | | | | 8.8x | | | | | | 8.4x | | |
| | |
1 day Prior
|
| |
30 days Prior
|
| ||||||
All Industries
|
| | | | 31% | | | | | | 36% | | |
Consumer and Retail
|
| | | | 30% | | | | | | 31% | | |
| | |
Selected Range of Implied
Premium |
| |
Implied Per Share Equity Value
|
| |||
All Industries – 1 day prior
|
| |
19% – 52%
|
| | | $ | 27.00 – $34.75 | | |
Consumer and Retail – 1 day prior
|
| |
17% – 41%
|
| | | $ | 26.50 – $32.00 | | |
Dollars in millions, unless otherwise stated
|
| |
2023F(*)
|
| |
2024F
|
| |
2025F
|
| |
2026F
|
| ||||||||||||
Revenue | | | | | | | | | | | | | | | | | | | | | | | | | |
Vitamin Shoppe
|
| | | $ | 1,248 | | | | | $ | 1,272 | | | | | $ | 1,309 | | | | | $ | 1,359 | | |
Pet Supplies Plus
|
| | | $ | 1,372 | | | | | $ | 1,475 | | | | | $ | 1,648 | | | | | $ | 1,859 | | |
American Freight
|
| | | $ | 912 | | | | | $ | 985 | | | | | $ | 1,145 | | | | | $ | 1,262 | | |
Badcock
|
| | | $ | 592 | | | | | $ | 591 | | | | | $ | 660 | | | | | $ | 730 | | |
Buddy’s
|
| | | $ | 57 | | | | | $ | 60 | | | | | $ | 67 | | | | | $ | 73 | | |
Dollars in millions, unless otherwise stated
|
| |
2023F(*)
|
| |
2024F
|
| |
2025F
|
| |
2026F
|
| ||||||||||||
Sylvan
|
| | | $ | 42 | | | | | $ | 45 | | | | | $ | 48 | | | | | $ | 51 | | |
Total Revenue
|
| | | $ | 4,223 | | | | | $ | 4,428 | | | | | $ | 4,876 | | | | | $ | 5,334 | | |
EBITDA(1) | | | | $ | 242 | | | | | $ | 281 | | | | | $ | 366 | | | | | $ | 440 | | |
EBIT(2) | | | | $ | 162 | | | | | $ | 199 | | | | | $ | 288 | | | | | $ | 363 | | |
Depreciation and Amortization
|
| | | $ | 80 | | | | | $ | 82 | | | | | $ | 78 | | | | | $ | 78 | | |
Net Working Capital (Increase)/Decrease
|
| | | $ | 125 | | | | | $ | 38 | | | | | $ | (18) | | | | | $ | (41) | | |
Capital Expenditures
|
| | | $ | 47 | | | | | $ | 42 | | | | | $ | 45 | | | | | $ | 45 | | |
Unlevered FCF(3)
|
| | | $ | 293 | | | | | $ | 220 | | | | | $ | 242 | | | | | $ | 263 | | |
Dollars in millions, unless otherwise stated
|
| |
2023F
|
| |
2024F
|
| |
2025F
|
| |
2026F
|
| ||||||||||||
Revenue | | | | | | | | | | | | | | | | | | | | | | | | | |
Vitamin Shoppe
|
| | | $ | 1,223 | | | | | $ | 1,261 | | | | | $ | 1,317 | | | | | $ | 1,399 | | |
Pet Supplies Plus
|
| | | $ | 1,393 | | | | | $ | 1,475 | | | | | $ | 1,648 | | | | | $ | 1,859 | | |
American Freight
|
| | | $ | 945 | | | | | $ | 1,058 | | | | | $ | 1,162 | | | | | $ | 1,242 | | |
Badcock
|
| | | $ | 808 | | | | | $ | 794 | | | | | $ | 845 | | | | | $ | 916 | | |
Buddy’s
|
| | | $ | 56 | | | | | $ | 60 | | | | | $ | 67 | | | | | $ | 73 | | |
Sylvan
|
| | | $ | 43 | | | | | $ | 45 | | | | | $ | 48 | | | | | $ | 51 | | |
Total Revenue
|
| | | $ | 4,468 | | | | | $ | 4,693 | | | | | $ | 5,087 | | | | | $ | 5,540 | | |
EBITDA(1) | | | | $ | 370 | | | | | $ | 444 | | | | | $ | 527 | | | | | $ | 613 | | |
EBIT(2) | | | | $ | 290 | | | | | $ | 354 | | | | | $ | 439 | | | | | $ | 526 | | |
Depreciation and Amortization
|
| | | $ | 80 | | | | | $ | 90 | | | | | $ | 88 | | | | | $ | 87 | | |
Net Working Capital (Increase)/Decrease
|
| | | $ | 194 | | | | | $ | 39 | | | | | $ | (44) | | | | | $ | (41) | | |
Capital Expenditures
|
| | | $ | 49 | | | | | $ | 42 | | | | | $ | 45 | | | | | $ | 45 | | |
Name
|
| |
Cash
($)(1) |
| |
Equity
($)(2) |
| |
Pension
NQDC ($) |
| |
Perquisites /
benefits ($)(3) |
| |
Tax
reimbursement ($) |
| |
Other
($) |
| |
Total
($) |
| |||||||||||||||||||||
Brian R. Kahn
|
| | | | 3,600,000 | | | | | | 8,020,620 | | | | | | — | | | | | | 44,331 | | | | | | — | | | | | | — | | | | | | 11,664,951 | | |
Andrew M. Laurence
|
| | | | 2,000,000 | | | | | | 2,673,540 | | | | | | — | | | | | | 44,148 | | | | | | — | | | | | | — | | | | | | 4,717,688 | | |
Andrew F. Kaminsky
|
| | | | 2,000,000 | | | | | | 2,673,540 | | | | | | — | | | | | | 44,331 | | | | | | — | | | | | | — | | | | | | 4,717,871 | | |
Eric F. Seeton
|
| | | | 875,000 | | | | | | 2,673,540 | | | | | | — | | | | | | 44,431 | | | | | | — | | | | | | — | | | | | | 3,592,971 | | |
Kenneth Todd Evans
|
| | | | 400,000 | | | | | | 1,003,680 | | | | | | — | | | | | | 14,579 | | | | | | — | | | | | | — | | | | | | 1,418,259 | | |
Fees section
|
| |
Amount
|
| |||
Financial advisory fees and expenses
|
| | | $ | 8,300,000 | | |
Legal, accounting and other professional fees and expenses
|
| | | $ | 6,500,000 | | |
SEC filing fees
|
| | | $ | 77,617 | | |
Printing, proxy solicitation and mailing costs
|
| | | $ | 80,000 | | |
Miscellaneous
|
| | | $ | 50,083 | | |
Total
|
| | | $ | 15,007,700 | | |
Name
|
| |
Age
|
| |
Position
|
| |||
Matthew Avril | | | | | 62 | | | |
Director
|
|
Cynthia S. Dubin | | | | | 61 | | | |
Director
|
|
Lisa M. Fairfax | | | | | 52 | | | |
Director
|
|
Thomas Herskovits | | | | | 76 | | | |
Director
|
|
Brian R. Kahn | | | | | 49 | | | |
Director
|
|
Gary S. Rich | | | | | 61 | | | |
Director
|
|
Nanhi Singh | | | | | 53 | | | |
Director
|
|
Name
|
| |
Age
|
| |
Position
|
| |||
Brian R. Kahn | | | | | 49 | | | | President and Chief Executive Officer | |
Eric F. Seeton | | | | | 51 | | | | Chief Financial Officer | |
Andrew M. Laurence | | | | | 48 | | | | Executive Vice President | |
Andrew F. Kaminsky | | | | | 54 | | | |
Executive Vice President and Chief Administrative Officer
|
|
Kenneth Todd Evans | | | | | 60 | | | | Chief Franchising Officer | |
Fiscal Year
|
| |
High
|
| |
Low
|
| |
Dividend
Paid |
| |||||||||
2021 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 41.50 | | | | | $ | 28.89 | | | | | $ | 0.375 | | |
Second Quarter
|
| | | $ | 40.00 | | | | | $ | 32.88 | | | | | $ | 0.375 | | |
Third Quarter
|
| | | $ | 36.60 | | | | | $ | 32.12 | | | | | $ | 0.375 | | |
Fourth Quarter
|
| | | $ | 55.10 | | | | | $ | 34.88 | | | | | $ | 0.625 | | |
2022 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 54.78 | | | | | $ | 40.00 | | | | | $ | 0.625 | | |
Second Quarter
|
| | | $ | 44.66 | | | | | $ | 33.88 | | | | | $ | 0.625 | | |
Third Quarter
|
| | | $ | 39.42 | | | | | $ | 26.88 | | | | | $ | 0.625 | | |
Fourth Quarter
|
| | | $ | 31.14 | | | | | $ | 22.67 | | | | | $ | 0.625 | | |
2023 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 33.82 | | | | | $ | 22.45 | | | | | $ | 0.625 | | |
| | |
Shares of Common Stock
Beneficially Owned |
| |||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Voting Percent
|
| ||||||
Named Executive Officers and Directors: | | | | | | | | | | | | | |
Matthew Avril
|
| | | | 128,041 | | | | | | * | | |
Thomas Herskovits
|
| | | | 30,633 | | | | | | * | | |
Brian R. Kahn(1)
|
| | | | 12,231,350 | | | | | | 34.8% | | |
Andrew M. Laurence
|
| | | | 573,482 | | | | | | 1.6% | | |
Andrew F. Kaminsky
|
| | | | 158,160 | | | | | | * | | |
Eric F. Seeton
|
| | | | 69,542 | | | | | | * | | |
Kenneth Todd Evans
|
| | | | 38,961 | | | | | | * | | |
Cynthia S. Dubin
|
| | | | 4,363 | | | | | | * | | |
Lisa M. Fairfax
|
| | | | 8,979 | | | | | | * | | |
Gary S. Rich(2)
|
| | | | 5,123 | | | | | | * | | |
Nanhi Singh(3)
|
| | | | 2,160 | | | | | | * | | |
All executive officers and directors as a group (11 persons)
|
| | | | 13,250,794 | | | | | | 37.69% | | |
5% Stockholders: | | | | | | | | | | | | | |
Vintage Capital Management, LLC(4)
|
| | | | 2,500,000 | | | | | | 7.1% | | |
FMR LLC(5)
|
| | | | 1,943,872 | | | | | | 5.5% | | |
BlackRock, Inc.(6)
|
| | | | 1,894,958 | | | | | | 5.4% | | |
| | |
Total Number
of Shares Purchased |
| |
Average Price
Paid per Share |
| |
Highest Price
Paid per Share |
| |
Lowest Price
Paid per Share |
| ||||||||||||
2021 Q1
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
2021 Q2
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
2021 Q3
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
2021 Q4
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
2022 Q1
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
2022 Q2
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
2022 Q3
|
| | | | 2,227,200 | | | | | $ | 34.98 | | | | | $ | 37.63 | | | | | $ | 31.88 | | |
2022 Q4
|
| | | | 3,693,544 | | | | | $ | 25.61 | | | | | $ | 27.19 | | | | | $ | 24.53 | | |
2023 Q1
|
| | | | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
| | |
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| | | | A-75 | | | |
| | | | A-75 | | | |
| | | | A-76 | | | |
| | | | A-77 | | | |
| | | | A-77 | | | |
| | | | A-77 | | | |
| | | | A-78 | | | |
| | | | A-78 | | | |
| | | | A-78 | | | |
| | | | A-78 | | | |
| | | | A-79 | | |
| | | | FREEDOM VCM, INC. | | |||
| | | | By: | | | /s/ Brian R. Kahn | |
| | | | | | |
Name:
Brian R. Kahn
|
|
| | | | | | |
Title:
President
|
|
| | | | FRANCHISE GROUP, INC. | | |||
| | | | By: | | | /s/ Eric Seeton | |
| | | | | | |
Name:
Eric Seeton
|
|
| | | | | | |
Title:
Chief Financial Officer
|
|
| By: | | | /s/ Brian R. Kahn | | | | |
| | | | BRIAN R. KAHN | | | | |
| VINTAGE OPPORTUNITY PARTNERS, L.P. | | | | | |||
| By: | | | Vintage Opportunity Partners GP, LLC, its general partner | | |
| By: | | | /s/ Brian R. Kahn | | | | |
| | | |
Name:
Brian R. Kahn
|
| | ||
| | | |
Title:
Authorized Signatory
|
| | | |
| By: | | | /s/ Brian R. Kahn | | | ||
| By: | | | /s/ Lauren Kahn | | | | |
| By: | | | /s/ Andrew M. Laurence | | | | |
| | | | ANDREW M. LAURENCE | | | | |
Name
|
| |
Owned Shares*
|
| |||
Brian R. Kahn
|
| | | | 2,154,807 | | |
Vintage Opportunity Partners, L.P.
|
| | | | 2,500,000 | | |
Brian Kahn and Lauren Kahn Joint Tenants by Entirety
|
| | | | 7,576,543 | | |
Andrew Laurence
|
| | | | 573,482 | | |
| By: | | | /s/ Brian R. Kahn | | | | |
| | | |
Name:
Brian R. Kahn
|
| | | |
| | | |
Title:
Member
|
| | | |
| By: | | | /s/ Brian R. Kahn | | | | |
| | | | BRIAN R. KAHN | | | | |
| By: | | | /s/ Brian R. Kahn | | | | |
| | | |
Name:
Brian R. Kahn
|
| | | |
| | | |
Title:
Authorized Signatory
|
| | | |
| By: | | | /s/ Brian R. Kahn | | | | |
| By: | | | /s/ Lauren Kahn | | | | |
| By: | | | /s/ Andrew M. Laurence | | | | |
| | | | ANDREW M. LAURENCE | | | | |
Rolling Stockholder
|
| |
Company Shares
|
| |
Rollover Value
|
| |
Rollover Shares
|
| |||||||||
Brian R. Kahn
|
| | | | 2,154,807 | | | | | $ | 64,644,210.00 | | | | | | 64,644.21 | | |
Vintage Opportunity Partners, L.P.
|
| | | | 2,500,000 | | | | | $ | 75,000,000.00 | | | | | | 75,000.00 | | |
Brian Kahn and Lauren Kahn Joint Tenants by Entirety
|
| | | | 7,576,543 | | | | | $ | 227,296,290.00 | | | | | | 227,296.29 | | |
Andrew Laurence
|
| | | | 573,482 | | | | | $ | 17,204,910.00 | | | | | | 17,204.91 | | |
| | | | B. RILEY FINANCIAL, INC. | | |||
| | | | By: | | | /s/ Bryant R. Riley | |
| | | | | | |
Name:
Bryant R. Riley
|
|
| | | | | | |
Its:
Co-Chief Executive Officer
|
|
| | | | FRANCHISE GROUP, INC. | | |||
| | | | By: | | | /s/ Eric Seeton | |
| | | | | | |
Name:
Eric Seeton
|
|
| | | | | | |
Its:
Chief Financial Officer
|
|
Exhibit 107
Calculation of Filing Fee Table
Schedule 14A
(Form Type)
Franchise Group, Inc.
(Exact Name of Registrant as Specified in its Charter)
Table 1 – Transaction Valuation
Transaction Valuation | Fee Rate | Amount of Filing Fee | |
Fees to be Paid | $704,325,500.72(1) | 0.0001102 | $77,616.67(2) |
Fees Previously Paid | – | – | |
Total Transaction Valuation | $704,325,500.72 | ||
Total Fees Due for Filing | $77,616.67 | ||
Total Fees Previously Paid | – | ||
Total Fee Offsets | – | ||
Net Fee Due | $77,616.67 |
(1) | Estimated solely for the purposes of calculating the filing fee, as of June 6, 2023, the underlying value of the transaction was calculated based on the sum of (a) the product of 22,367,791 shares of common stock, par value $0.01 per share (“FRG Common Stock”), of Franchise Group, Inc. (the “Company”) multiplied by the per share merger consideration of $30.00 (the “Per Share Merger Consideration”); (b) the product of 216,376 shares of FRG Common Stock underlying the outstanding Company stock options multiplied by $20.72 (which is the difference between the Per Share Merger Consideration and the weighted average exercise price of the Company stock options of $9.28); and (c) the product of 960,282 shares of FRG Common Stock underlying outstanding restricted stock units, which may be entitled to receive the Per Share Merger Consideration, multiplied by the Per Share Merger Consideration. |
(2) | The amount of the filing fee, calculated in accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, was calculated by multiplying $704,325,500.72 by 0.0001102. |