Abigail Summerville
NEW YORK (Reuters) – Private equity firm Roark Capital is exploring a sale of Primrose Schools that could value the U.S. education franchise at nearly $2 billion including debt, people familiar with the matter said on Thursday.
Roark has tapped boutique investment bank RW Baird to initiate the sale of Primrose, which is headquartered in Atlanta, Georgia, said the people, who asked to remain anonymous because the discussions are confidential.
Primrose, which was acquired by Roark in 2008 and is one of the largest early childhood education franchises in the country, operates more than 500 schools in more than 35 states that provide education and care to children and families.
The first Primrose School opened in 1982 in Georgia. Each school is independently owned and operated by franchise operators.
In 2024, Primrose expects to generate about $85 million in earnings before interest, taxes, depreciation and amortization (EBITDA) and $120 million in revenue, the people said, adding that Roark hopes to achieve a valuation equivalent to more than $20 million. times its EBITDA.
Baird declined to comment. Primrose and Roark did not answer immediately.
Franchise-operated companies typically receive high multiples from private equity buyers who like to bet on businesses that generate stable royalties. Last month, Blackstone (NYSE:) agreed to buy the Tropical Smoothie Cafe restaurant franchise for about $1.7 billion.
In 2022, private equity firm Sycamore Partners acquired Goddard Systems, another early childhood education franchise with more than 600 schools, for an undisclosed sum. In 2018, Golden Gate Capital acquired early childhood education franchise Learning Experience, which has more than 350 centers in the US and UK.
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Headquartered in Atlanta, Georgia, Roark, with $38 billion in assets under management, owns several franchised businesses across a variety of industries, including sandwich chain Subway, fitness center chain Orange Theory and restaurant chain Arby’s.