Corporate wallets start to open

Anyone working in the franchise sector should take note of the short sharemarket announcement put out yesterday by Queensland franchise brand manager Retail Food Group.

The company, which a few weeks ago announced the $30 million acquisition of Pizza Capers, yesterday said it increased its debt facility with NAB from $95 million to $135 million and pushed out the maturity date from September 2013 to September 2014.

“Not only will the increased facility assist in funding of the Pizza Capers acquisition, it provides sufficient headroom to position RFG for future acquisitive activity whilst providing shareholders with the comfort of an extended facility maturation date to September 2014”, CEO Tony Alford said in a statement.

Staying in Queensland for a moment, there was also news out of the automotive sector, with trucking group MaxiTRANS paying $21.6 million for Queensland Diesel spares.

Like RFG, MaxiTRANS says it remains on the lookout for further acquisitions as it seeks to expand its national footprint.

Two deals don’t necessarily signify a sudden return of business confidence, but it is a sign that growth companies are still seeing big opportunities – even in a patchy environment.

RFG has been particularly aggressive in recent months, buying Evolution Coffee Roasters last September and then Pizza Capers last month. Alford and his management team recognise that franchising is a sector ripe for consolidation and are hunting for targets that have established brands and good growth prospects.

It’s a great lesson for every SME. Don’t close your eyes to these sorts of opportunities, even when markets aren’t running exactly as you’d like.

I thought there were a couple of other interesting points to come out of these deals.

Firstly, both are debt funded, which shows at least some businesses remain willing to borrow for the right opportunities in the right circumstances. It’s also great to see that banks are willing to do deals with growing companies.

Secondly, MaxiTRANS made a point of saying that the due diligence behind its deal took a full six months. The message here is that the current market conditions do provide the opportunity for companies to take their time with these deals and make sure they get them right.

Deals don’t need to be rushed in to. There’s still room to be cautiously confident, and aggressively measured.


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