Helping Diversify an Owner's Holdings


Company

Industry

Spinrite Inc.

Consumer

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Helping Diversify an Owner's Holdings


Company: Spinrite Inc.

Position: Consumer

Location: Listowel, Ontario

Date of Investment: January 2004

Exit Date: January 2007


Company Description
Spinrite is the leading designer, manufacturer, and marketer of consumer craft yarn products in North America. Spinrite is well known to the hobby market for its Bernat, Patons, Caron, Peaches & Crème, Lily Sugar'n Cream, and Phentex brands, which are sold through mass merchants, craft stores, and independent specialty stores.

Background
Spinrite is located in a rural community where the company is the largest employer and the owner and his family are well known to and deeply involved in the local community. With a significant portion of the family's net worth invested in Spinrite, they decided to sell a majority stake in Spinrite to a financial partner so they could diversify their holdings and implement a succession plan for the owner, who had reached retirement age. The family also wanted to retain an ongoing interest in the business.

In choosing a partner, Spinrite's owner wanted to select a responsible, highly qualified buyer who would be a good "fit" with senior management, a responsible steward who would focus on continuing to help grow the business and who could be trusted to close the deal. Following a limited round of bidding by potential financial partners and an extensive due diligence process conducted by the owner and his advisors on the small group of potential financial partners, Sentinel was selected as his preferred partner.

The Opportunity

  • To acquire a category leader with the most comprehensive brand portfolio in the craft yarn segment

  • To partner with Spinrite's owner and committed and experienced management team

  • To invest in an industry with strong projected category growth due to the aging of the baby boomers and increased number of younger knitters

 

Accomplishments
Completed a Smooth Ownership Transition: Spinrite made a smooth transition to new ownership after more than 50 years of family ownership.

Implemented a CEO Transition: Following the closing, Sentinel and the former owner successfully recruited a new CEO with a deep experience and a proven record in the consumer products industry. The new CEO worked seamlessly with the founder and after a brief transition period, the founder was able to achieve his objective of retiring. 

Achieved Growth Objectives: In a short period, Spinrite grew substantially by capitalizing on category growth, introducing new products, and increasing its share of the retail channel. 

Outcome
By 2005, Sentinel and management had achieved the growth objectives established at the outset of the transaction and Spinrite completed an IPO on the Toronto Stock Exchange in a highly successful transaction for Sentinel, management, and the former owner.

Strategic Partners, Inc.

Consumer; Healthcare

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Helping Diversify an Owner's Holdings


Company: Strategic Partners, Inc.

Position: Consumer; Healthcare

Location: Chatsworth, California

Date of Investment: April 2006

Exit Date: August 2010


Company Description
Strategic Partners is a leading supplier of medical uniforms for the specialty retail, mass merchant, catalog, and ecommerce channels. Its brands include Cherokee, Dickies, Sketchers, Baby Phat, Team Scrubs, and Tooniforms. With over 50 license agreements, Strategic is also the industry's largest licensee.

Background
Sentinel was introduced to the transaction by one of our investors with whom Strategic's CEO was also an investor. His goals were to select a financial partner he could trust, who would be a good "fit" with senior management, who would be a responsible steward of the business, who possessed relevant industry and acquisition experience, and who could assist management in achieving certain estate planning objectives. No investment banker was involved in the transaction. Following several meetings that enabled the parties to get to know each other, management selected Sentinel as their partner. Strategic's management team, who continued with Strategic in their existing positions, became significant minority investors.

The Opportunity

  • To acquire a majority interest in the leading player in the medical uniform category

  • To partner with a worldclass management team who continued to own a significant stake in the business

  • To participate in expected industry growth driven by aging of boomers that would fuel growth in the number of medical professionals

  • To utilize Strategic's position as industry leader to selectively make bolt-on acquisitions and secure additional brand licenses

 

Accomplishments
Smooth Transition to Sentinel Ownership: As an entrepreneur-owned and operated business since its founding in 1995, Sentinel and management worked closely together to ensure a smooth transition.

Accelerated Growth Through Acquisitions and Licensing: Acquired the Dickies brand license for the medical uniform industry, which previously had been held by a smaller, entrepreneur-founded company. Also acquired the Skechers license and several Disney brand licenses.

Excellent Financial Performance: During Sentinel's ownership, Strategic grew its sales significantly and more than doubled its profitability.

Outcome
Having accomplished our investment objectives during our four year ownership period, Sentinel and management sold the business to another financial buyer in a management buyout transaction. Strategic’s founder and CEO continued to run the business under new ownership.