Black Canyon, BRS in 4.5x restaurant exit

Los Angeles-based Black Canyon Capital and New York-based Bruckmann, Rosser, Sherrill & Company and have generated a roughly 50% IRR on their investment in Logan’s Roadhouse.

Black Canyon Capital and Bruckmann, Rosser, Sherrill & Company (BRS) have exited a joint investment in restaurant chain Logan’s Roadhouse, generating roughly a 4.5x multiple and a 50 percent IRR, according to a source familiar with the matter. The two firms sold the Nashville, Tennessee-based franchise to New York based private equity firm Kelso & Company.

Los Angeles-based Black Canyon and New York-based BRS acquired the restaurant chain in December 2006. The company has more than 200 restaurants in 23 states, and has grown from roughly $40 million EBITDA in 2006 to around $76 million EBITDA at the time of the sale to Kelso & Company.

Black Canyon’s investment was made from its $500 million Direct Investment Fund, raised in 2006. The firm was founded in September 2004 by Michael Hooks and Mark Lanigan, prior to which Black Canyon invested in partnership with Canyon Capital Advisors. Logan’s Roadhouse is the fourth investment exit from the fund. Bruckman, Rosser invested in Logan's Roadhouse at the same time as Black Canyon.

“It’s one of those business you’d love to hang on forever but we’d held it for about four years and we knew it would be an attractive candidate for another buyer,” principal at Black Canyon Desmond Henry told PEO. “Four years is kind of a perfect amount of time to hold an asset, especially one that’s performed and grown and is going to be a very attractive return to our investors.” Black Canyon’s fund has about $75 million of dry powder left to deploy, Henry said.

Black Canyon invests in leveraged buyouts, management buyouts, recapitalizations and refinancings, and makes investments to finance growth and acquisitions. The firm focuses on the business services, consumer and retail and industrial sectors. Black Canyon was a founding investor in Virgin America, acquiring an undisclosed majority interest in the company in 2005.

Since its founding, Black Canyon has invested over $1 billion in consumer, retail, specialty finance, restaurants, media and industrial sectors. The firm is partnered with Los Angeles-based Canyon Capital Advisors, which has more than $14 billion of assets under management. Black Canyon looks to invest in companies with at least $5 million of EBITDA, with a typical investment size between $25 million and $75 million.

Bruckmann, Rosser, Sherrill & Co. was founded in 1995 by former senior executives of Citicorp Venture Capital. The firm has $1.4 billion in funds under management, and has made 16 transactions in the restaurant sector to date.