Private Equity in 2022

For much of last year, private-equity groups didn’t participate in too many deals. They were still building an understanding of the post-pandemic economy and valuations, making it difficult to evaluate investment opportunities. Adding to direct pandemic-related concerns were the inflation of two of the industry’s largest costs: labor — up 13 percent over the past year — and supply chain costs, up more than 11 percent. Some mitigation is expected, but the pressures added to the uncertainty.

A majority of the deals we saw in 2021 were owners of existing restaurant concepts acquiring other brands to combine operations, and build scale. Now, we see COVID-driven hesitancy decreasing and expect an increase in restaurant transactions with private equity investors. Interest is extremely high, making mergers and acquisitions much more competitive. 

Additionally, we are seeing restaurant initial public offerings (IPOs) at least every other week, making the market more attractive for…