Two Buyout Firms Agree to Acquire McCormick & Schmick’s Restaurants

June 8, 2001

NEW YORK, June 8, 2001 /PRNewswire/ — Two New York-based private equity investment firms, Bruckmann, Rosser, Sherrill and Co., Inc. (BRS) and Castle Harlan, Inc., announced today they had jointly signed an agreement to buy McCormick & Schmick’s seafood restaurants from Avado Brands, Inc. (Nasdaq: AVDOC) of Madison, Georgia. The transaction was valued at $123.5 million.

McCormick & Schmick’s management, including founders Bill McCormick and Doug Schmick, will also participate in the transaction.

McCormick & Schmick’s, based in Portland, Oregon, operates 34 upscale seafood restaurants throughout the United States. In 2000, it had sales of $162.4 million, up from $125.6 million in 1999.

Both BRS and Castle Harlan are experienced restaurant investors and operators. Castle Harlan currently owns Charlie Brown’s Steakhouses, Marie Callender’s and Luther’s Barbecue, and the firm formerly owned Morton’s Restaurant Group, as well as McCormick & Schmick’s. Castle Harlan sold McCormick & Schmick’s in 1997 to Apple South, a predecessor company of Avado, after owning it for about 30 months.

BRS has significant investments in California Pizza Kitchen and Acapulco Restaurants (which recently acquired the El Torito chain) and previously had investments in Au Bon Pain and Restaurant Associates, Inc. (prior owner of Charlie Brown’s Steakhouses). In addition, BRS has signed a definitive agreement to purchase Il Fornaio, an operator of upscale Italian restaurants and wholesale bakeries.

David Pittaway, senior managing director at Castle Harlan, noted that McCormick & Schmick’s had added 19 restaurants since Castle Harlan sold the company in 1997.

“Obviously, it is a concept that has abundant opportunities for future growth,” Pittaway said. “We have great confidence in the talents of Bill McCormick and Doug Schmick and in their vision and prowess in operating fine restaurants.”

Hal Rosser, a BRS partner, called McCormick & Schmick’s “a unique restaurant concept with a proven track record and an excellent management team. We are excited about the opportunity to invest in a company that has the potential to become a dominant brand in the industry.”

Pittaway and Rosser said that equity financing for the transaction would come from Castle Harlan Partners III L.P., a $630 million private equity limited partnership formed in 1997, and from Bruckmann, Rosser, Sherrill & Co. II, L.P. Fleet Boston, SunTrust Bank and IBJ Whitehall Bank formed a group to provide senior debt financing.

BRS was formed in 1995 by Bruce C. Bruckmann, Harold O. Rosser, Stephen C. Sherrill and Stephen F. Edwards and manages approximately $1.2 billion of committed capital. The firm is currently investing its second fund, which has $770 million of committed capital. The founding partners are former senior officers of Citicorp Venture Capital Ltd., where they worked from the mid-1980s until forming their own firm.

Castle Harlan was founded in 1987 by John K. Castle, former president & chief executive officer of Donaldson, Lufkin & Jenrette, the investment banking firm, and Leonard M. Harlan, founder and former chairman of The Harlan Company, a real estate investment and financial advisory firm.


Paul Kaminski – Bruckmann, Rosser, Sherrill & Co., 212-521-3700