Helping Reach the Next Level


Company

Industry

Engineered Controls International, LLC

Industrials

 Print     

Helping Reach the Next Level


Company: Engineered Controls International, LLC

Position: Industrials

Location: Elon, North Carolina

Date of Investment: August 2010

Exit Date: December 2013


Company Description
Engineered Controls is the leading global provider of highly engineered, mission-critical flow control products used in the transportation, delivery, and storage of LPG, LNG, and other cryogenic gases. ECI serves a large, global customer base in more than 85 countries including distributors and OEMs.

Background
Sentinel acquired ECI from a prominent family who, for several years, was uninvolved in the day-to-day operation of the business. Management, who had run the business for more than 25 years but did not own any equity, was looking for a partner to help transition ECI to its next phase of growth.

The Opportunity

  • To acquire the industry leader with a well-established brand and a defensible market position
  • To purchase a business with a long history of success and steady growth

  • To partner with a deep, experienced, and committed management team that had not previously had the opportunity to own equity

 

Accomplishments
Completed a Smooth Transition to New Ownership: As management had spent most of their careers working in a family-owned business, we worked closely together to ensure a smooth transition to new ownership. Sentinel also implemented an option and co-investment program that provided our management partners with significant equity upside and aligned incentives.

Positioned the Business for Growth: We worked together with management to position ECI for future growth by expanding its manufacturing footprint in North Carolina and increasing its focus on LNG, particularly the fast growing China market.

Outcome
During Sentinel’s ownership, ECI built a strong foundation for growth, expanded into new markets and geographies, and significantly grew its profitability. In December 2013, ECI was sold to another private equity firm in a management buyout, which was highly successful for Sentinel and its management partners, who continued with the company.

LTI Boyd, Inc.

Industrials

 Print     

Helping Reach the Next Level


Company: LTI Boyd, Inc.

Position: Industrials

Location: Modesto, California

Date of Investment: April 2006

Exit Date: July 2012


Company Description
LTI Boyd is a leading global manufacturer of high performance, custom-engineered solutions for gasket, sealing, insulation, and impact protection applications in the heavy truck, recreational vehicle, enterprise electronics, off-highway, aerospace, and consumer electronics markets. LTI Boyd primarily sells to large, multinational OEMs.

Background
LTI's founders grew the business from a small regional manufacturer to a leader in the niche rubber and plastic component market. As it became larger and more complex, the founders sought a partner to help take the business to the next level by developing its management and systems infrastructure and pursuing acquisitions. Sentinel acquired LTI as a platform to consolidate the fragmented rubber and plastic sealing components market.

The Opportunity
Hundreds of small family-owned businesses manufacture rubber and plastic sealing components. Their customers are generally large multinational OEMs who increasingly are consolidating their vendor bases to simplify their supply chains. Sentinel recognized that this dynamic would place pressure on smaller, underdeveloped suppliers, creating the impetus for an industry consolidation. With a strong free cash flow profile, LTI was well positioned to pursue a plan to:

  • Develop and implement the systems and management infrastructure to improve financial tracking and reporting and support a much larger company

  • Diversify into new end markets through new product development

  • Pursue growth through acquisitions

 

Accomplishments

  • Upgraded LTI's Infrastructure: Sentinel assisted management in implementing a new IT and accounting system which helped create a robust financial reporting platform. After implementation, LTI's monthly financial closing period was reduced from a month to less than five days, and management was able to easily track key financial metrics and business drivers. Sentinel also helped recruit additional management talent who were instrumental in helping transform the business.

  • Executed Acquisition Strategy: With an upgraded infrastructure, LTI was able to play offense during the 2008–2009 recession. As one of the best capitalized businesses in its industry, LTI was well positioned to acquire competitors struggling with difficult market conditions. LTI completed three acquisitions during Sentinel’s ownership as part of an aggressive growth strategy. Two small tuck-in acquisitions helped broaden LTI’s geographic reach and add complementary products. The third acquisition was transformative. LTI acquired Boyd Corporation to form LTI Boyd, which more than doubled the size of the business and created the clear industry leader in the custom-engineered rubber and plastic sealing components market.

 

Outcome
In July 2012, having integrated the acquisitions, grown revenue fivefold, and built a strong platform to support future growth, LTI Boyd was sold to another private equity firm in a management buyout, which was a highly successful transaction for Sentinel and its management partners.

Massage Envy, LLC

Franchising; Consumer

 Print     

Helping Reach the Next Level


Company: Massage Envy, LLC

Position: Franchising; Consumer

Location: Scottsdale, Arizona

Date of Investment: December 2009

Exit Date: August 2012


Company Description
Massage Envy was founded in 2002 to capitalize on the significant unfulfilled demand for professional, affordable, and convenient therapeutic massage services. At the time of our purchase, Massage Envy was a leading franchisor of therapeutic massage services through a network of approximately 600 clinics.

Background
We were introduced to the opportunity by independent sponsor Princeton Ventures, who had developed a relationship with Massage Envy’s CEO. Princeton approached Sentinel because of our experience in growing franchise brands, established record of closing transactions, and sizeable capital base.

The Opportunity
To accelerate the growth of a established franchise concept by implementing and executing strategies to grow the number of clinics, average clinic volume, and expand the services offered to customers.

Accomplishments
Identified Optimal Locations: We worked closely with management to make a significant investment in software and management talent to identify real estate locations with a high likelihood of success. This initiative enabled Massage Envy to more than double its annual openings while maintain its almost-zero new clinic failure rate.

Created Financing Program to Accelerate Unit Growth: We helped management source and secure a dedicated financing program to accelerate new unit growth. The program enabled more than 36 units to open during a period when franchisee access to debt markets was seriously curtailed.

Introduced New Service Offerings: During our watch, Massage Envy introduced facial treatments to augment core massage therapy services. The number of clinics offering facial treatments grew from 11% in 2009 to 67% by 2012, which enhanced unit-level economics.

Optimized Clinic Operations: During our ownership, we assisted management in analyzing how to enhance member retention, increase capacity utilization, and improve therapist retention. The result of these initiatives materially boosted unit-level economics, and positioned the Massage Envy brand for long-term success.

Outcome
During Sentinel’s approximately 2¾–year ownership, Massage Envy grew from approximately 600 to nearly 850 operating clinics with a backlog of more than 270 clinics waiting to open. With systemwide sales nearly doubling, revenue and EBITDA more than doubled. In August 2012, Massage Envy was sold in a management buyout to another private equity firm.

Vintage Holdings, Inc.

Business Services; Distribution

 Print     

Helping Reach the Next Level


Company: Vintage Holdings, Inc.

Position: Business Services; Distribution

Location: Beaver Dam, Wisconsin

Date of Investment: October 2007

Exit Date: September 2015


Company Description
Vintage Parts is the leading independent distributor of original slow-moving and inactive OEM replacement parts for automobiles, recreational vehicles, and construction, agriculture, and other industrial equipment. Pursuant to long-term agreements with 66 OEMs, Vintage Parts purchases old-model parts inventories and warehouses them for future sale to more than 75,000 distributors, many of whom are authorized OEM dealers.

Background
Vintage Parts was previously owned by the Swire Group, a privately held $20 billion transnational corporation headquartered in the United Kingdom. Swire owns a range of businesses and Vintage Parts was an autonomous, non-core asset that Swire decided to divest. Swire chose Sentinel because of our established record of closing transactions, our rapport with management, and our record and experience with specialty industrial distributors.

The Opportunity

  • To accelerate Vintage Parts' growth by adding new OEM partners and expanding its unique distribution model, which had been highly successful in the automotive sector, into new end markets.

  • To partner with an experienced and highly motivated management team that had not previously had the opportunity to own equity.

 

Accomplishments
Built Strong Partnership with Management: Sentinel closely collaborated with management to establish growth plans and priorities and to align interests. We also created an incentive program to provide Vintage Parts' executives with significant financial upside for personal wealth creation.

Added OEMs and Diversified into Non-Automotive End Markets: At the outset, automotive OEMs represented nearly two-thirds of Vintage Parts' sales. Sentinel worked closely with management to identify new end markets that could leverage Vintage Parts' distribution model. During our ownership, Vintage Parts added 30 new OEM partners and successfully penetrated the agriculture, construction, heavy-truck, mining equipment, marine, industrial engine, and oil & gas sectors. Today, more than half of Vintage Parts' sales come from non-automotive sectors.

Outcome
During Sentinel's eight-year ownership, Vintage Parts significantly exceeded the growth objectives established at the outset of our investment. Having substantially exceeded our investment objectives, in September 2015, Vintage Parts was sold in a management buyout to another private equity firm.