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Levine Leichtman Capital Partners Acquires Five Star Franchising

Levine Leichtman Capital Partners (LLCP), a prominent private equity firm operating from Los Angeles, has recently announced its partnership with management to acquire Five Star Franchising. This strategic acquisition marks an important milestone in LLCP's ongoing efforts to expand its portfolio and enhance its presence in the franchising sector. Financial specifics of the transaction have not been disclosed, highlighting LLCP's strategic emphasis on growth rather than immediate financial disclosure.

Five Star Franchising Overview

Founded in 2004, Five Star Franchising has established itself as a leading franchisor in the home services market, boasting over 870 locations across both the United States and Canada. The company's diverse range of services is segmented across eight brands: Five Star Bath Solutions, Gotcha Covered, Bio-One, 1-800 Packouts, Mosquito Shield, Card My Yard, Five Star Flooring, and Decorate With Lights. Additionally, Five Star incorporates ProNexis, a digital service provider focused on lead generation and marketing solutions, which is indicative of its forward-thinking approach in the home services industry.

Leadership Continuity

In terms of management structure, Five Star will continue to operate under the current executive team, spearheaded by co-founders Scott Abbott (CEO) and Chad Jones (COO). According to Matthew Frankel, Managing Partner at LLCP, they are excited about collaborating with the existing leadership, citing their significant role in driving Five Star's impressive growth trajectory. LLCP aims to utilize its extensive experience in the franchising space to assist Five Star in expanding its unit count and enhancing same-store sales growth.

Greg Flaster, Senior Managing Director at LLCP, emphasized the unique positioning of Five Star within the home services market, pointing out the brand's rapid growth and its exceptional franchise development and marketing support. He conveyed confidence that the firm is strategically positioned to derive outstanding value and benefits for both franchisees and customers alike.

Strategic Vision for Growth

Scott Abbott expressed enthusiasm about the partnership with LLCP, emphasizing the alignment of vision between the firms. They intend to leverage LLCP's expertise in supporting franchise growth, particularly through the potential of ProNexis, the digital services platform. Their ambition is to accelerate growth organically and through acquisitions, further solidifying their place in the home services industry.

The acquisition of Five Star marks the sixth platform investment of Levine Leichtman Capital Partners VII, L.P. LLCP brings extensive experience from prior investments in various successful franchising concepts, including well-known brands such as SYNERGY HomeCare, Lawn Doctor, and Tropical Smoothie Cafe. With Five Star's addition, LLCP has now engaged with 19 franchising investments, collectively representing a diverse range of industries, including home services.

Expertise and Track Record

Levine Leichtman Capital Partners, which has been in operation for 42 years, is known for its distinctive Structured Private Equity investment strategy that combines debt and equity capital. This strategy aims to provide management teams with growth capital in a more flexible and appealing manner compared to traditional private equity models. As of now, LLCP manages assets worth approximately $15 billion, showcasing its robust portfolio and the talents of its dedicated investment professionals.

In terms of legal representation during the transaction, Kirkland & Ellis LLP and Greenberg Traurig LLP acted on behalf of LLCP, while Five Star was advised by Robert W. Baird & Co. This level of professional expertise further affirms the seriousness and strategic nature of the acquisition.

The future looks promising for Five Star Franchising under LLCP's guidance, with significant opportunities for innovation and growth ahead in the thriving home services sector.