News

L.A. equity firm buys large Taco Bell franchisee

March 17, 2011

Brentwood Associations, a Los Angeles-based private equity investment firm, has acquired K-Mac Holdings Corp., the third largest Taco Bell franchisee in the U.S.

The announcement comes a day after Connecticut-based Olympus Partners declared it had sold K-Mac Holdings on a strong ROI.

K-Mac, headquartered in Ft. Smith, Ark., operates 167 Taco Bells, mainly in the Southwest, as well as 23 total KFC and Golden Corral restaurants. Founded in 1964 by Ken McGruder, K-Mac operates stores in Arkansas, Indiana, Missouri, Oklahoma, Tennessee and Texas.

Brentwood Associations will retain K-Mac’s current president and COO Tina Reagan.

Brentwood is partnering with Arlon Food and Agriculture Investment Program and Northwestern Mutual Capital on the equity portion of the transaction.

“I am excited to partner with Brentwood and Arlon. They truly understand our business, and I look forward to the experience, strategic input and financial resources that they will bring to bear as we continue to grow the business.” Reagan said. “I believe the new ownership appreciates the fact that our unique culture and passionate people are the key drivers of our success.”

This marks the third investment in the restaurant industry and second investment Brentwood has made in the Yum! system. In 2004, Brentwood made an investment in Pacific Island Restaurants, a franchisee of 89 Pizza Hut and Taco Bell restaurants in Hawaii, Guam and Saipan.

K-Mac is the seventh investment from Brentwood Associates Private Equity IV L.P.

BofA Merrill Lynch, Wells Fargo Bank, and SunTrust Robinson Humphrey were joint lead arrangers on the senior debt financing supporting the acquisition.

Brentwood was represented by Burr & Forman LLP in conjunction with the transaction and Latham & Watkins LLP on the debt financing.