Roark Capital, the private equity maestro, is considering selling its star pupil, Primrose Schools, aiming for a dazzling $2 billion valuation, debt included, according to sources with insider knowledge.
Roark has enlisted the help of boutique investment bank R. W. Baird to orchestrate the sale of Primrose, an Atlanta-based early childhood education giant. These tipsters, preferring to remain incognito due to the hush-hush nature of the deal, spilled the beans.
Acquired by Roark back in 2008, Primrose Schools boasts a vast network of over 500 schools across 35 states, nurturing young minds and families alike. The franchise’s journey began in 1982 in Georgia, and each school is independently owned and operated by local franchisees.
Looking ahead to 2024, Primrose is projected to rake in about $85 million in EBITDA and $120 million in revenue. Roark’s ambitious goal? A valuation exceeding 20 times EBITDA, a hefty price tag in the world of private equity.
When asked for comments, Baird played it cool and declined, while Primrose and Roark kept their lips sealed.
Private equity loves franchise-operated businesses for their steady royalty fees, and they’re willing to pay a pretty penny. Case in point: Blackstone recently snapped up Tropical Smoothie Cafe for a cool $1.7 billion.
The early education franchise market is hot, with Sycamore Partners acquiring Goddard Systems in 2022 and Golden Gate Capital buying the Learning Experience in 2018.
Roark, based in Atlanta and managing a hefty $38 billion in assets, has a diverse portfolio including Subway, Orange Theory, and Arby’s. Now, with Primrose possibly graduating from its lineup, Roark is ready to test the market’s appetite for quality education franchises.