VICORP Restaurants, Inc.

VICORP Restaurants, Inc. is a leading operator of family style restaurants under the “Village Inn” and “Bakers Square” brand names and franchised restaurants under the “Village Inn” name. At the time of acquisition by Goldner Hawn, VICORP operated 258 company-owned restaurants in 14 states and 115 franchised Village Inns in 21 states.

Prior to its acquisition by Goldner Hawn, VICORP was a publicly-traded company on the NASDAQ. As a small-capitalization company in a sector that was very much out-of-favor at the height of the Internet boom, VICORP suffered from a lack of institutional sponsorship and virtually no research coverage. In early 2000, the VICORP Board of Directors initiated a limited sale process that yielded no credible buyers. Following the failed auction effort, Goldner Hawn was introduced to the company through a relationship with a limited partner. Goldner Hawn found VICORP to be a value-laden company led by a talented management team, with significant real estate assets, well-recognized and highly respected brands, and stable store-level cash flows. In addition, working with the incumbent management, Goldner Hawn identified opportunities to substantially improve the profitability of the company by eliminating the costs and constraints of public ownership.

While VICORP appeared to be an attractive potential investment, there were significant obstacles to acquiring the company, including a split among the Board of Directors regarding the re-opening of sale discussions following a failed sale process, as well as a tightening debt financing market. Despite these potential roadblocks, Goldner Hawn was able to enter into direct negotiations with the VICORP Board of Directors and to reach an agreement to acquire the company on attractive terms. Factors that led to this outcome included:

• Goldner Hawn’s experience in public company acquisitions. VICORP represented Goldner Hawn’s third public company acquisition, an unusually long track record for a middle-market firm. Goldner Hawn was able to quickly establish credibility with the Board of Directors and to forge a good working relationship with key directors.

• Goldner Hawn’s financing/structuring skills and relationships. A key component of the financing for the VICORP acquisition was a sale-leaseback transaction that capitalized upon the company’s attractive owned real estate and favorable tax attributes. This financing permitted the company to be acquired for an effective, rent-adjusted price of less than four times EBITDA.

• Goldner Hawn’s industry insights and partnership approach with management. Based on its internal expertise in the restaurant industry and the good working relationship established at the outset with VICORP management, Goldner Hawn was able to develop a highly credible plan for quickly improving the cash flow of the company post-acquisition. This permitted Goldner Hawn to submit an offer for the company that represented a substantial premium to the pre-offer trading price of the company's stock.

The acquisition of VICORP closed in May of 2001. Goldner Hawn’s investment fund and the institutional investor that had introduced Goldner Hawn to the company each invested roughly equal amounts of equity, and a Goldner Hawn representative served as the chairman of the Board of Directors following the acquisition. VICORP management made a substantial investment alongside the sponsors and was given an opportunity to earn additional equity through a stock option plan.

Post-acquisition, Goldner Hawn helped the VICORP management team refocus its efforts on cash flow growth and debt reduction, rather than the reported earnings per share growth that had been required under public ownership. By focusing on improving the profitability of the existing store base, and by eliminating the expenses that had been associated with having publicly-traded stock, the company was able to increase EBITDA by over 25% and to repay a substantial amount of acquisition debt in the first two years following the acquisition.

Having achieved the long-term projections that had been established with management at the outset of the acquisition, VICORP was sold to a private equity firm in a transaction that closed in June of 2003. Goldner Hawn’s investment returned over three times capital invested in slightly more than two years, and generated an internal rate of return of approximately 66%.

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