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Neal Aronson: The Private Equity Investor

The years 2005-2008 were notable for a wave of private equity acquisitions. The 2010-2011 period will go down as the second wave. With millions in promised investment dollars sitting idle, the environment was ripe for merger and acquisition activity. The biggest mover of all in the franchise world this year was the private equity firm, Roark Capital Group.

At the end of 2010 Roark Capital finalized its purchase of Auntie Anne's Pretzels. In 2011 it bought out Corner Bakery Café with its 119 company-owned and franchised units. Giant Arby's followed in the summer, when Wendy's divested itself of the chain.

Neal Aronson

Neal Aronson, who joined the firm in 2001, is managing partner at Roark Capital Group.

Private equity investor Neal Aronson has been through the ropes in franchising. Before Roark, he was co-founder, executive vice president, chief financial officer and director of U.S. Franchise Systems, Inc. While there Aronson helped transform USFS from one brand with 22 hotels in nine states to three brands with more than 500 hotels in 50 states and five countries, making USFS the tenth largest hotel company in the United States. He helped raise $94 million of equity securities in three tiers: a private placement, an initial public offering and a secondary offering.

"Roark is a still growing and seemingly progressive private equity player," declares John Gordon, a restaurant unit analyst. The principal of the Pacific Management Consultant Group argues that the majority of the 2005 through 2007 franchise chain acquisitions in the private equity restaurant purchase class have flopped, via Chapter 11 filings. He thinks Roark is a different breed of private equity investor. Gordon observes: "Now up to 11 brands, Roark Capital seem to be devoted to the restaurant space long term and are working forward."

Correction: This journal erroneously wrote that Neal Aronson was the son of Atlanta-based attorney Mort Aronson. Neal is not. The mistake was caught by this journal but only several days after publication.

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