Family office investors are often seen as patient investors willing to commit resources for longer periods as opposed to short-term exit.

Here let’s look at an acquisition made by JAB, owner of Krispy Kreme and Panera buying the British sandwich chain, founded in 1983, Pret-a- Manger, or simply Pret, with an eye for its U.S. expansion.

JAB Holdings, backed by Germany’s wealthy Reimann family, has spent tens of billions of dollars to assemble a huge portfolio of brands, expanding its coffee and beverage empire.

Deal points tell us that the British sandwich maker was valued at $2 bn including debt. Which represents a multiple of 15x their 2017 EBITDA. With this transaction, JAB takes another step in becoming a force in the food world.

Using the precedent transaction methodology, we compare this acquisition to some of the recent peer acquisitions and their valuation multiples. We can see that the revenue multiple increases with a higher EBITDA margin, whereas the EBITDA multiple is in a steady range of 15-16 across peers. A year before Panera’s acquisition was done by JAB paying multiples 2.3x EV/Revenue and 16.1x EBITDA on the enterprise value of $6,5bn.

As Pret has a lower EBITDA margin than the competitors, it should have a lower revenue multiple. Assuming a 1.8x revenue multiple on their revenue we achieve a value very close to $2bn.

We can verify this by taking the mean enterprise value to EBITDA multiple of the peer group and applying to Pret’s EBITDA. Here we again obtain a value close to the value derived from the revenue multiple.