Creating a Standalone Business Infrastructure


Company

Industry

Fasloc, Inc.

Industrials

 Print     

Creating a Standalone Business Infrastructure


Company: Fasloc, Inc.

Position: Industrials

Location: Martinsburg, West Virginia

Date of Investment: October 2005

Exit Date: January 2007


Company Description
Fasloc is a leading manufacturer of specialized underground mine roof support systems. Key products are polyester resin cartridges that permanently secure roof support bolts used to create stable and secure roofs in underground coal mines.

Background
Fasloc was created and owned by DuPont, who developed Fasloc’s products to complement DuPont’s mine explosives business. At the time of the transaction, Fasloc operated as a manufacturing plant with key support functions including finance, IT, insurance, and benefits handled by DuPont corporate. Fasloc operated on DuPont’s centralized SAP system, with all major IT capabilities run by DuPont.

At closing, Fasloc was unable to operate as a standalone business. To function independently, Fasloc needed to: (i) evaluate, purchase, and implement a completely new IT backbone; (ii) hire a CFO and manage all aspects of the finance function previously provided by DuPont; and (iii) establish standalone insurance and benefits similar to those provided by DuPont. Importantly, all of this would need to be accomplished while Fasloc was undergoing a rapid expansion without causing any customer or manufacturing disruption.

The Opportunity

  • To acquire the leading industry brand and established leader in a growing niche market fueled by a favorable growth outlook for the coal industry

  • To invest in a platform business with a long history of profitability, a high return on net invested capital, and attractive free cash flow

  • To partner with Fasloc's committed and highly experienced management team who co-invested alongside Sentinel

 

Accomplishments
Smooth Transition to a Fully Standalone Business: Before the closing, management and Sentinel developed a detailed plan to quickly and seamlessly transition to a fully standalone business. One of Sentinel's executives functioned as temporary CFO and worked closely with management to oversee installation of the systems necessary to establish the business as a standalone entity. Within 90 days of the closing, Fasloc had hired a permanent CFO, installed a new IT system, and developed standalone insurance and benefits programs mirroring those previously provided by DuPont. As a result, Fasloc was no longer dependant on DuPont for transition services. All of this was accomplished with minimal disruption to the business.

Outcome
Following a successful transition to a standalone business, and having significantly increased both revenue and profitability, Fasloc was sold in January 2007 to DYWIDAG-Systems International, a leading European mining and tunneling systems manufacturer, in a highly successful transaction for both Sentinel and the Fasloc management team.

IEP Technologies, LLC

Industrials

 Print     

Creating a Standalone Business Infrastructure


Company: IEP Technologies, LLC

Position: Industrials

Location: Marlborough, Massachusetts

Date of Investment: July 2013

Exit Date: September 2015


Company Description
IEP Technologies is the leading global provider of explosion protection systems and services, with operations in the U.S., Germany, Switzerland, France, Turkey, and the U.K. IEP offers the industry's leading array of industrial explosion systems, design engineering, replacement parts, material testing, and service and support to its global customers around the world.

Background
At the time of our purchase, IEP consisted of three legacy brands, Fenwal, Kidde, and Incom, which have been sold in the U.S. and Europe since the 1950s. These legacy brands comprised five separate businesses that were owned by United Technologies Corp. ("UTC"), but were not integrated into one, unified company. UTC decided to divest IEP because it was a non-core asset.

Key IEP functions including operations, finance, IT, insurance, and benefits were handled centrally by UTC, leaving IEP unable to operate as a standalone business. To function independently, IEP needed to:

  • Relocate out of UTC facilities in the U.S., Germany, and the U.K.

  • Install a completely new IT infrastructure

  • Hire 15+ personnel including a CFO and head of marketing and business development

  • Establish standalone insurance, benefits, and payroll programs similar to those provided by UTC

 

In addition, as part of the transaction, UTC planned to retain the Fenwal and Kidde brands, which necessitated the creation of a new, unified global brand. Importantly, all of this needed to be accomplished without causing any disruption to IEP and its global customer base.

The Opportunity

  • To create a new platform with scalable infrastructure specifically designed to support IEP's worldwide operations and growth trajectory

  • To purchase a proven and well-established brand with strong market position that was poised to continue growing

  • To partner with IEP's committed and highly experienced senior management team

 

Accomplishments
Smooth Transition to a Fully Standalone Business: Before the closing, management and Sentinel developed a detailed plan to quickly and seamlessly transition to a standalone business. Together, we recruited a talented CFO and promoted a highly experienced manager from the U.K. as head of European operations. We also developed and introduced the new global "IEP Technologies" brand. In addition, Sentinel recruited a chief transition officer to help manage IEP's relocation to new facilities in the U.S., Germany, and the U.K. while IEP's management team implemented a new global IT system.

Within nine months of the closing, IEP had completed this transition with almost no disruption to its business.

Outcome
Following a successful transition to a standalone business, and having significantly increased both revenue and profitability, IEP was sold in September 2015 to HOERBIGER Group, a leading European provider of compression technology, drive technology, and hydraulics, in a highly successful transaction for both Sentinel and IEP's management team.

Southern California Pizza Co., LLC

Food / Restaurants; Franchising

 Print     

Creating a Standalone Business Infrastructure


Company: Southern California Pizza Co., LLC

Position: Food / Restaurants; Franchising

Location: Corona, California

Date of Investment: August 2008

Exit Date: December 2012


Company Description
Southern California Pizza Company (“SoCal Pizza”) is the largest Pizza Hut franchisee in California and the third largest in the United States. At the time of our investment, SoCal Pizza operated 221 Pizza Huts in greater Los Angeles.

Background
As part of a refranchising program to reduce the number of company-owned units, Pizza Hut, a subsidiary of Yum! Brands, decided to divest 123 units in the Los Angeles market. While store-level personnel were included with the sale, no executive management was included. To qualify as a bidder, Pizza Hut required potential buyers to have proven QSR experience, an approved senior management team, and an in-place IT infrastructure capable of handling one of the largest franchisees in its system.

Recognizing an opportunity to acquire units with a strong brand in a tier-one market, we recruited as CEO a seasoned restaurant executive who had a long record of success operating and optimizing QSR units for Pizza Hut and other franchise systems. Together with our new CEO partner, we set out to build the necessary infrastructure for the platform that would support future growth. After a complex and lengthy sale process, Pizza Hut selected Sentinel as the winning bidder. At closing, we had already executed the following initiatives to prepare SoCal Pizza to operate as a standalone business:

  • Recruited an entirely new senior executive team

  • Built a full support team to manage the finance, marketing, and human resources functions that Pizza Hut had previously provided

  • Implemented a brand new IT infrastructure

  • Established standalone insurance, benefits, and other necessary programs

 

The Opportunity

  • To acquire stable but underperforming QSR units of a prominent brand in a growing category
  • To invest in a solid business that could serve as a platform for future acquisitions

  • To partner with an experienced and highly motivated management team

 

Accomplishments
Smooth Transition to a Fully Standalone Business: Because we had already recruited before the closing a new management team and built a complete infrastructure, SoCal Pizza was able to fully function from day one without business or customer disruption.

Secured Cost Improvements: SoCal Pizza's new management team was able to achieve significant and permanent cost improvements within several months of closing.

Acquired Additional Units to Build Scale: After the initial closing, Sentinel learned that Pizza Hut was considering divesting additional contiguous Pizza Hut units. Sentinel approached Pizza Hut, and in August 2009, SoCal Pizza completed the acquisition of an additional 98 units in greater Los Angeles.

Outcome
Following a successful transition to a standalone business and a smooth integration of the large add-on acquisition, SoCal Pizza's revenue and profitability increased significantly. In 2012, having held the investment for more than four years and having achieved our investment objectives, Sentinel sold SoCal Pizza to another private equity firm in a management buyout transaction.