Elephant Bar- Mezzanine Financing

3956 words 16 pages
Elephant Bar Restaurant: Mezzanine Financing
Oday Tillawi
Professor Shelly Canterbury
Finance 441-001 Spring 2016

Executive Summary:
Elephant Bar Restaurant is a California based company founded by Chris Nancarrow in 1979. The restaurant started as a test concept of Carrow’s Restaurants, a chain of more than 150 full-service restaurants. Elephant bar was sold to W. R. Grace in 1985, and repurchased in 1993. The company aims to differentiate itself through innovative culinary concepts. On a product level, the company provides an “elephant-sized” culinary experience to the customer. In order to support innovation, the menu featured complex dishes that included “one unusual ingredient.” On a store level, the restaurants
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Allied Capital is legally a business development company (BDC), business structures created by congress to primarily increase the availability of long-term growth capital to companies that had limited access to it. AC generated an average total return of 18.3% for its shareholders since its inception and as of 2003; its portfolio consisted of 122 companies with a balance sheet topping $3 billion.
The firm primarily allocated its injections in less cyclical industries such as business services and consumer products. However, its committee were proactive in considering investments of all kind, including buyouts, acquisitions, growth capital, and recapitalizations. Debt provisions typically ranged from $10-$100 million and buyout investments from $50-$250 million. AC’s due diligence started with a brief overview of the restaurant industry. There are several important points that make the industry a very attractive industry: * The restaurant industry accounted for 4% of U.S. GDP or $300 billion in sales annually. * Between 1981 and 2001, nominal sales had grown at rate of 7.3%. * Between 2001 and 2006, it is anticipated that sales will grow at a nominal compounded annual growth rate of 5.2%, reaching a total of $387 billion. * In light of the economic downturn, the industry continued to perform well with real sales growth rising from 0.5% to 1.5%.