_{DEAL OF THE MONTH}

Roark Takes a Bite Out of Dave’s

Hungry for another food deal? Well, we’re back… with another Hot Deal of the Month.

Roark Capital - the owner of basically every restaurant ever - has made a spicy acquisition with its purchase of Dave’s Hot Chicken for $1 billion.

If the name Roark rings a bell, it should. The firm kicked off our inaugural Deal of the Month pick in 2023 with its $10 billion acquisition of Subway.

With over 20 restaurant brands under its ownership, it’s safe to say Roark has great taste when it comes to picking companies.

Dave’s Hot Chicken fits Roark’s franchise playbook to a tee: ~97% of units are franchised, and the growth is on fire. The chain is projected to grow 76.5% in units next year, hitting 420 locations by end of 2025.

And while financials are sparse (as expected in a private deal), Dave’s is forecasting ~$1 billion in revenue this year, putting the multiple at around 1.0x sales. In a market flooded with sky-high SaaS multiples, that’s practically a discount bucket.

Roark’s Long Game

What makes Roark different from the average PE shop isn’t just its appetite, it’s its patience. Most firms aim to exit in 5-7 years, but Roark plays the long game. Case in point: it bought CKE Restaurants (Carl’s Jr., Hardee’s) from Apollo in 2013, and still hasn’t exited.

LPs usually don’t love 12-year holds, but Roark seems to have kept them happy, likely through consistent cash flow and partial recaps. Less flip, more fry.

20 Millionaires Made

As finance professionals, we spend a lot of time looking at deals and looking at numbers in spreadsheets. And yes, that is an important part of the job, but it is also important to remember that behind those numbers are actual people.

As part of the transaction, Dave’s negotiated transaction bonuses for over 20 different staff members, including restaurant level managers, creating 20 millionaires overnight. If that doesn’t make you want to start a franchise or launch a hot sauce, then you should go be an accountant or a lawyer.

Roark’s clearly cooking up another winner, and if history is any indication, we’ll be writing about this exit sometime in 2040. Hopefully with our kids on the deal team.

_{NEWS ROUNDUP}

Top Reads

• Goldman re-enters SPAC market amid $11 billion revival

• Millennium Management plans to sell a minority stake at a $14 billion valuation

• Neuberger Berman closes $4bn GP-led secondaries fund, quadrupling size of predecessor

• Five Elms Capital closes $1.1B Fund VI to support software growth

• BlackRock targets $400B in private market fundraising by 2030

• Meta Deal Spooks Scale AI partners

• Benefit Street closes $500 million US CLO equity fund

• Brookfield to buy Hotwire Communications in $7 billion deal

• KKR-Stonepeak to take Assura private in a $2.3 billion deal

• Quantum Energy seeks to raise $4.5 billion for its 9th fund

_{PRESENTED BY HERS}

Ladies: Stronger, Fuller Hair Starts Here

Aging is a natural part of life, but hair loss doesn’t have to be. 

Hers offers access to clinically-proven, 100% online treatments to regrow hair in as little as 3 months.* With dermatologist-trusted ingredients and a range of prescription-strength options personalized to you, over 90% of women see real improvement.**

Plus, you’ll always have 24/7 access to medical professionals for support and adjustments every step of the way.

Ready to look and feel your best? Take the free hair quiz to get started. 

_{STRATEGIC DEAL OF THE MONTH}

Chart Goes with the Flow(serve)

You’d think I’d have run out of bad puns by now. But no, they just keep flowing. I’m always charting a course for the next one so I can serve it up at a moment’s notice.

Now that I’ve popped my shoulder back into place after nearly breaking my arm patting myself on the back, it’s time for some classic industrials nonsense, where two companies no one has ever heard of drop a mega-deal and now I have to learn about some niche component no one cares about that somehow keeps the entire global economy alive.

This week’s random mega-deal? Chart Industries and Flowserve are merging in a $19 billion merger of equals.

The deal is an all stock deal, with Chart shareholders receiving 3.165 shares of Flowserve common stock for every share of Chart. Chart shareholders will own 53.5% of the pro forma company at closing.

The deal is being done at a 10x pro forma EBITDA basis, including $300 million of run-rate synergies. Remember when I said earlier that we were back in the world of sane valuations? Apparently, I spoke too soon.

The pro forma company will be the second largest industrial platform in terms of revenue, beating out several other companies that I am sure you have never heard of.

As usual with these industrial deals, we have to look at capital allocation. What good is a scaled business with strong, stable margins if it’s not paying me dividends after all?

The pro forma company will focus on repaying debt following a contemporaneous refinancing of Chart’s existing debt at closing, with the aim of remaining investment grade (unlike the US government, not that I’m still bitter).

Additionally, the company will focus on maintaining quarterly dividends in line with the historical per share payouts of Flowserve, something investors will surely appreciate, right?

Not exactly. Chart Industries’ share price got absolutely hammered the past month, falling 10% on announcement of the deal and continuing its downward spiral.

Unfortunately, Flowserve hasn’t served its investors any better, with its shares also falling 6% on announcement.

I don’t believe that this is a bad deal, at least the investor deck was very convincing. However, I think the public markets disliked this deal because of the price.

10x pro forma synergy adjusted EBITDA is something your banker puts in the first round bid to win the deal, not something you actually transact on.

Hopefully, the pro forma company can prove its doubters wrong, adjust the flow of its share price chart upwards, and maybe service a little debt along the way. Didn’t think I’d sneak a few more in there, did you?

_{INT’L DEAL OF THE MONTH}

Nippon Steels the Show, Finally

For almost as long as I have been writing Buysiders - no seriously, this made our seventh edition - Nippon Steel has been trying to acquire US Steel for $15 billion, forming the world’s third largest steel producer by volume.

18 months later, it’s finally done.

This might be the most hard-fought transaction in US Steel’s history since JP Morgan founded the company in 1901. But with a $55/share price tag and a 40% premium, even J.P. would probably approve.

Before we get too deep on the deal dynamics, please rise for a moment of silence as we retire the iconic ticker X, which has been listed on the NYSE since 1991.

Now onto the fun stuff. As you can tell from the share price graph, there was a lot of uncertainty in this deal getting done, even as recently as January 2025, with US Steel’s share price rocketing 61% YTD.

Most of the drama came from D.C., where both Democrats and Republicans opposed selling the steelmaking symbol of American industry to a foreign buyer, even one from an ally like Japan.

In the end, after a hard fought negotiation, Trump agreed to the deal provided the US Government received a so-called golden share. Trump sure loves his gold themed things…

The golden share gives the US government the right to veto any reductions in capital investments, changing the company’s name or headquarters, redomiciling the company outside of the US, moving any jobs or production outside of the US, or any decisions to close or idle existing facilities... Basically, the only thing Nippon can do is make the steel mill go brrr without Trump’s say so. 

US Steel has a storied past. It was at one time the world’s most valuable company. It was the first billion dollar corporation. It was so prominent, it was referred to simply as “The Corporation.” I mean, its ticker was one letter! This deal guarantees another $11 billion of capital investment into the US steel industry.

While I won’t comment on the golden share concept, it is good to see cooler heads prevailed and let’s be honest, the real winner here was whoever’s great-grandfather bought the original stock certificates back in 1991 and forgot about them in the safety deposit box until today.