There probably has never been more a challenging time to look for deals. With that said, dealmakers are hoping for a better 2023. But as the last couple of years have shown, things can quickly change. No matter the market conditions, acquirers are always look for stable businesses to buy. Franchises are one of them.

KKR-backed Neighborly, a home services provider, bought junk removal company Junk King. Junk King has more than 150 locally-owned franchises across 32 states and in Canada. The acquisition expands Neighborly into a new segment of the home services sector.

Franchises are attracting buyers because it allows them to buy a piece of an established brand that already has been operating for a while, has growth potential and generates attractive cashflow.

“Buyers love the stability and predictability of royalty revenue. Based on the performance of franchisors during the last recession, private equity continues to see franchising as a solid industry to invest in,” Patrick Galleher, managing partner for Jupiter, Fla.-based investment bank Boxwood Partners tells Mergers & Acquisitions, which advised Junk King on the deal.

Consumer demand for home services still represents an opportunity for buyers as a lot of those services are recession resistant. Neighborly sees junk removal as another one.

“We have a strategic focus, and we will remain opportunistic with our acquisitions,” Neighborly president Mike Bidwell tells us. “We want to own the mainstream home services someone typically needs on a reoccurring basis.”

-Demitri Diakantonis