David Palmer, senior restaurant analyst at UBS, told CNBC’s “Squawk on the Street” that fast-food companies, especially those that rely on franchisees, may become private equity take-over targets.
“Franchise businesses are very attractive to private equity,” Palmer said Thursday.
“So, to some degree, if you have a challenged business which may be a two- to three-year turnaround, and you can borrow against that franchise income -- which is steady income -- and you have some restructuring opportunities by selling more company stores to franchisees, private equity will tend to pay a significant higher amount for those businesses than the public markets will.”