By Abigail Summerville

NEW YORK (Reuters) – Private equity firm Roark Capital is exploring a sale of Primrose Schools that could value the U.S. education franchise at nearly $2 billion, including debt, people familiar with the matter said on Thursday.

Roark has tapped boutique investment bank R. W. Baird to launch a sale process for Atlanta, Georgia-based Primrose, the sources said, requesting anonymity as the discussions are confidential.

Primrose, which was acquired by Roark in 2008 and is one of the largest early childhood education franchises in the country, operates more than 500 schools in over 35 states that provide education and care to children and families.

The first Primrose school was opened in 1982 in Georgia. Each school is independently owned and operated by franchise operators.

In 2024, Primrose expects to generate around $85 million of earnings before interest, taxes, depreciation and amortization (EBITDA) and $120 million of revenue, the sources said, adding that Roark is hoping to command a valuation for the company equivalent to more than 20 times its EBITDA.

Baird declined to comment. Primrose and Roark did not immediately respond.

Franchise-operated companies typically command high multiples from private equity buyers who like to bet on businesses that generate steady royalty fees. Last month, Blackstone (NYSE:) agreed to buy restaurant franchise Tropical Smoothie Cafe for about $1.7 billion.

In 2022, private equity firm Sycamore Partners acquired Goddard Systems – another early education franchise with over 600 schools – for an undisclosed amount. In 2018, Golden Gate Capital bought early education franchise the Learning Experience, which has over 350 centers across the U.S. and the U.K.

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Atlanta, Georgia-based Roark, which has $38 billion in assets under management, owns several franchise businesses across industries, including sandwich chain Subway, fitness chain Orange Theory and restaurant chain Arby’s.





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