by Aaron Allen
Restaurant Consultant, Speaker & Industry Analyst
Aaron Allen & Associates
Club deal is a term that investors have likely come across in financial publications from time to time, but not really taken the time for a closer look. As we’ve continued to build out our foodservice investment pipeline (and, in the process, launched Aaron Allen Capital Partners), it’s something we have been evaluating more closely so we can implement our “Dynamic Perspective. Square Deals.” mantra.
What Exactly is a Club Deal?
It’s a relatively straightforward investment approach where investors pool their money to acquire a controlling or large stake in a business. This structure has been around for some time, but it has gained increasing traction among private market investors the past several years in lieu of the traditional investment fund model.
Some of the best deals don’t get done because of the factors that are eliminated by club deal approach, so It’s easy to see why some investors might find this structure attractive. This includes lower fees, greater control over the deal terms, and risk diversification benefits. We also believe these structures can be beneficial to the investment target as well, including bringing in a diversified group of investors that doesn’t necessarily dilute cap tables and the ability to develop value creation strategies that aren’t constrained by fund lifespans or return objectives.
