I have a contact that's been in the business for over 25 years, he's one of the founders of his niche of QSR in the country. He currently only has 10 locations now - previously much more.
He wants to get back into the growth business and have identified a few buyout targets (QSR chains) - all of which are profitable.
For this transaction, should he set up a holding company, raise equity and debt financing for acquisition of the chains? If so, how much ownership should he be expected to give up? Total transaction size would about US$5, with additional $3M of working capital. He doesn't intend to invest any securable assets into the hold co., or provide any personal guarantees - only his time commitment to grow the business.
I've also heard of search funds being an option - how would the cap table be divided between the operators and investors?
Is there a better way to structure this venture?