Joining a Sentinel Portfolio Company


Company

Industry

Interim Healthcare Holdings, Inc.

Healthcare; Franchising

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Joining a Sentinel Portfolio Company


Company: Interim Healthcare Holdings, Inc.

Position: Healthcare; Franchising

Location: Sunrise, Florida

Date of Investment: May 2006

Exit Date: October 2012


Company Description
Established in 1966, Interim is one of the nation's largest providers of home healthcare services through a national franchise system. Its franchisees, who operate more than 325 branches across 37 states, deliver a range of home healthcare services including home nursing, home hospice care, and home assisted living. Interim provides daily care to more than 50,000 people and generates annual systemwide sales of approximately $750 million.

Background
Interim’s founding CEO, who started the company 40 years earlier, indicated that he planned to retire following its sale. He was, however, willing to serve as interim CEO for a limited time and help the search for his replacement and assist with the transition.

The Opportunity
Under previous ownership, Interim had embarked on an expensive company-owned branch and infrastructure build-out program. This strategy coupled with the repercussions of the 1997 Balanced Budget Act significantly affected Interim’s performance. Sentinel’s investment thesis for Interim centered on returning the company to its original focus as a pure-play home healthcare franchisor and exiting all non-core businesses. Given this strategy, Sentinel decided to seek a CEO candidate with a strong background in both healthcare and franchising to lead the transformation and repositioning of the business.

Accomplishments
Located the Right Executive: Sentinel’s search led to a talented healthcare executive, who previously had spent 16 years in the Interim system working both for Interim and for one of its large franchisees. Most recently, she was COO of one of the nation’s largest providers of nurse staffing services.

Refocused the Business Under New Leadership: Interim's new CEO led the company's restructuring and repositioning and transitioned the business into a pure-play franchisor with a focused offering of home healthcare services. Specifically, Interim refranchised all of its company-owned branches and exited all non-core businesses by shutting down its travel nurse staffing business, spinning off its physician staffing business, and divesting its occupational health business and captive home healthcare software division. Interim also launched new service offerings in home hospice care and home assisted living.

Outcome
Under the leadership of its new CEO, Interim’s growth accelerated and its free cash flow increased substantially. In 2012, having held the investment for six years and having achieved our investment objectives, Sentinel sold Interim to another private equity firm in a management buyout transaction. Following Sentinel’s exit, the executive we recruited has continued as Interim’s CEO.

Southern California Pizza Co., LLC

Food / Restaurants; Franchising

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Joining a Sentinel Portfolio Company


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 exit, 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-level management was provided. To qualify as a bidder, Pizza Hut required potential buyers to have proven QSR experience and an approved senior management team capable of overseeing one of the largest franchisees in its system. Because a proven, pre-identified CEO was essential to being selected as the buyer, we set out to recruit an experienced executive to manage the business and optimize the units, which were not operating at their full potential.

The Opportunity

  • To acquire stable but underperforming QSR units of a prominent brand in a growing category

  • To invest in a leading market share QSR in a tier-one market that could serve as a platform for future acquisitions

 

Accomplishments
Located the Right Executive: Sentinel’s search led to a talented executive who previously had spent two decades in the QSR industry, primarily in the Pizza Hut system. Most recently, he was a regional president for another QSR concept and was responsible for more than 350 restaurants.

Built Brand New Management and IT Infrastructure: Working with our new CEO partner, we recruited an entire senior executive team, hired 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, and established standalone insurance, benefits, and other necessary programs. All of this was completed prior to closing, which allowed SoCal Pizza to achieve a seamless transition to new ownership.

Optimized the Business and Acquired New Units to Build Scale: The new CEO brought new discipline and processes to SoCal Pizza, and within several months of closing had achieved significant and permanent cost improvements. With performance at the original units having improved significantly, we approached Pizza Hut about acquiring additional units in Southern California. In August 2009, we completed the acquisition of an additional 98 units, almost doubling the size of the business.

Outcome
Under the leadership of its new CEO, SoCal Pizza’s growth accelerated and its 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. Following Sentinel’s exit, the executive we recruited has continued as SoCal Pizza’s CEO.