Duck Donuts recently secured growth capital from NewSpring Capital through an April 2021 sale. The process, says Duck Donuts CEO Betsy Hamm, was long, taking more than a year to go through the due diligence and ensure they found the right partner.
"It was a very, very thorough process," Hamm says. "And what was great about it was not only were we learning about private equity groups and they were learning about us, but we wanted to make sure that we had the right fit in a partnership for a long-term partnership and who could bring the most value to Duck Donuts and be a good fit for our culture."
Capital, she says, was one of the company's main goals through a sale. With that capital, she says the focus is on development, which involves looking at what types of tools and resources the company needs to fill its pipeline to accelerate growth, and convenience — finding ways to make interacting with the company more convenient for its customers. But the company had interests beyond capital as well.
"We needed a partner who could come to the table with that expertise and someone who's been there and done that because we were both really essentially new to the franchising industry over the last few years and Duck Donuts has been our first experience with franchising," she says.
Duck Donuts Founder Russ DiGilio says several years ago he began to consider the next steps for the franchise and could see as the company was starting to grow that it was going to hit a point where it needed some assistance to get to the next level.
"I always had in my mind that we really needed an infusion of capital to free us up to do some other things and also having that added element of expertise to assist us and maybe help us to avoid some common pitfalls was really high on the list," he says.
One surprise from the process was just how thorough and long it was, Hamm says.
"Just when you think that you've given every piece of information that you have on your company, there's always a little bit more that they're looking for," she says.
Engaging in that process during a pandemic, however, showed her that there was a lot of opportunity for future growth.
'If we can survive recessions and pandemics, the future looks really bright," Hamm says. "That was something we certainly capitalized on during the process of finding capital."
Hamm and DiGilio spoke at the Philadelphia Smart Business Dealmakers Conference about the process of selling their business to NewSpring Capital. Hit play on the video above to catch the full conversation.