Barteca: The Challenge and Opportunity of Private Equity

Andy Pforzheimer and Sasa Mahr-Batuz, co-founders of a highly successful seven-location restaurant brand, had just opened the first location of a new brand. They had mapped out future expansion for both brands but wondered if, rather than lining up an assortment of investors for each expansion location as they had in the past, this was the time to bring in an institutional investor. There were pros and cons. They could benefit by associating with an investment group with deep experience in scaling emerging restaurant chains. And it would be a relief not to have to undertake tedious fundraising for each new location. But, would they lose control of their intensely managed operations? Would the company's valuation be higher if they waited to prove the success of their brands in multiple geographies? How should they evaluate possible transactions and investors?