What’s the value of an idea? To securitize intellectual property for the Dunkin’ Brands buyout, Jordan Yarett had to find out — down to the penny.
America may run on Dunkin’, and Dunkin’ Brands Inc. is now run by a private equity consortium: In March 2006 The Carlyle Group, Bain Capital LLC and Thomas H. Lee Partners LP bought the coffee-and-doughnut chain. In a year defined by private equity activity, that was par for the course. What was unusual was how the consortium bought Dunkin’ Brands. Rather than using unsecured debt, which is the common practice, the consortium funded the buyout through a so-called whole-business securitization in which most of Dunkin’ Brands’ assets, including all of its intellectual property, were securitized. The securitization brought in about $1.6 billion of the $2.4 billion deal; it was the first time the technique was used to pay for a leveraged buyout in the United States.
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