Helping Entrepreneurs Realize a Bold Dream


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Border Foods, Inc.

Food / Restaurants; Franchising

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Helping Entrepreneurs Realize a Bold Dream


Company: Border Foods, Inc.

Position: Food / Restaurants; Franchising

Location: Minneapolis, Minnesota

Date of Investment: October 1996

Exit Date: December 1999


Company Description
Border Foods owns and operates more than 170 Taco Bell, Pizza Hut, and KFC restaurants in Minnesota, and has exclusive rights to develop Taco Bells in that state.

Background
Recognizing opportunity in a fundamentally strong sector that was out of favor with investors, Sentinel initiated a search for an investment in the QSR industry in early 1996. This search led to Sentinel being introduced to a Minnesota entrepreneur and 16-year veteran Taco Bell franchisee who, at the time, operated 10 Taco Bell restaurants in Minnesota. Taco Bell had offered him the opportunity to purchase its 65 company-owned Taco Bells in Minnesota. However the entrepreneur did not have enough resources or transaction experience to put the deal together. After carefully considering several private equity firms, the entrepreneur chose Sentinel as his equity partner. With Sentinel, he saw an opportunity to establish significant ownership and create substantial wealth.

Sentinel purchased a majority interest in Border Foods and became the first U.S. private equity firm to secure from Taco Bell and its then corporate parent Pepsico exclusive statewide development rights for the Taco Bell brand. To complete the transaction, the entrepreneur contributed his interest in his 10 Taco Bell restaurants.

The Opportunity

  • To partner with a proven operator who had a long record of success in the Mexican QSR business

  • To utilize Border Foods' valuable statewide development rights to build new units and increase density in Minnesota

  • To complement an experienced small business entrepreneur with additional management talent and build the necessary infrastructure to support future growth

 

Accomplishments
Supplemented Management in Preparation for Growth: Following the closing, Sentinel recruited a retired, highly successful restaurant executive with a proven record in another large-scale QSR system to help the entrepreneur manage the transition from a 10-store to 75-store operation. Sentinel also played an instrumental role recruiting a Taco Bell finance executive as Border Foods' new CFO and a Taco Bell franchise manager as its new chief development officer. By the end of the first year, Border Foods had installed the systems and management infrastructure necessary to operate more than 100 units.

Opened New Units and Completed Acquisitions: During Sentinel's ownership, Border Foods opened 12 new units and completed two add-on acquisitions—one in the company's core Taco Bell business and one in its sister KFC system.

Outcome
After holding the investment for three years, Border Foods' EBITDA had almost doubled. Having achieved its investment objectives, in late 1999, Sentinel sold Border Foods in a recapitalization transaction to the entrepreneur and his management team, who accomplished their goals of becoming majority owners and creating personal wealth. Since then, Border Foods has continued to grow and add new units under the leadership of its founding entrepreneur.

Falcon Holdings, LLC

Food / Restaurants; Franchising

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Helping Entrepreneurs Realize a Bold Dream


Company: Falcon Holdings, LLC

Position: Food / Restaurants; Franchising

Location: Chicago, Illinois

Date of Investment: December 1999

Exit Date: May 2005


Company Description
At the time of our investment, Falcon owned and operated 97 Church's® Chicken restaurants in the Midwest, making it the then largest franchisee in the Church’s system.

Background
Falcon was owned by a specialty finance company that securitized and sold quick service restaurant loans to institutional investors. The specialty finance company had provided debt financing to Falcon's former owners but ultimately foreclosed on the loan after Falcon's performance deteriorated. Under its ownership, the finance company engaged a turnaround consultant who staunched the cash flow losses and stabilized the business. Because the finance company’s primary business was providing debt financing for restaurants, not owning them, with Falcon operating at breakeven, it decided to sell the business. As an ongoing lender, the finance company sought a trustworthy buyer like Sentinel with a proven QSR record.

To position itself as the next owner, Sentinel needed to replace the turnaround consultant with a permanent CEO. To do this, Sentinel recruited as CEO the COO of a 48-unit Church’s Chicken franchisee, who did not own equity in his company and was seeking an opportunity to create personal wealth. He had an impressive 11-year record in the Church's Chicken system and had led the successful turnaround of the 48-unit franchisee after it was purchased out of bankruptcy by a private investor.

The Opportunity
• To back a proven operator to implement an operating turnaround to restore the units to previous profitability levels and thereafter, to build additional Church's Chicken restaurants in existing markets

• To partner with an ambitious executive who had not yet established personal wealth but who owned a significant stake in Falcon and was highly motivated to create equity value

Accomplishments
Executed Turnaround: Following the closing, Falcon relocated its headquarters to Chicago, close to the majority of its restaurants. Under its new CEO, Falcon recruited a new senior management team, replaced most of its store managers, and upgraded its financial and systems capabilities. The result was that food and labor costs were quickly brought into line and the customer experience improved dramatically.

Stabilized and Grew Business: Within months of the closing, comparable restaurant sales growth reached double-digit rates and profitability climbed rapidly. With the business stabilized, Falcon began a capital investment program of reimaging existing restaurants and building new restaurants in existing markets.

Outcome
After holding the investment for more than five years and having accomplished its investment objectives, Sentinel sold Falcon to its CEO and management team in a recapitalization transaction. Under the management team Sentinel helped build, Falcon has continued to grow and today operates more than 175 restaurants.

National Spine & Pain Centers, LLC

Healthcare

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Helping Entrepreneurs Realize a Bold Dream


Company: National Spine & Pain Centers, LLC

Position: Healthcare

Location: Rockville, Maryland

Date of Investment: September 2011

Exit Date: June 2017


Company Description
National Spine & Pain Centers is a provider of interventional pain management (IPM) services focused on relieving chronic, neck, back, and spine pain. IPM is a rapidly growing medical specialty whose objective is to relieve pain through advanced, minimally invasive procedures while preventing costly, invasive surgery. At the time of Sentinel's exit, NSPC supported 69 locally-branded IPM clinics in seven eastern states ranging from Connecticut to North Carolina.

Background
NSPC was founded in 1998 by three physicians who had recently completed their anesthesiology residencies and pain management fellowships. By early 2011, NSPC had established itself as a large and respected IPM group with nine clinics throughout Maryland. NSPC’s founders saw an opportunity to continue expanding their business within the highly fragmented IPM industry, both in Maryland and beyond. They sought a financial partner to help them build infrastructure to support growth and execute an acquisition strategy of like-minded practices. The founders selected Sentinel from a limited group of private equity buyers based on our proven record (i) executing growth-by-acquisition strategies in the healthcare services sector, (ii) helping companies build management and support infrastructure to facilitate rapid growth, and (iii) the chemistry and fit between Sentinel and NSPC's founding physicians.

The Opportunity

  • To partner with a highly motivated group of founding physicians with a record of success and establish NSPC as the nation’s leading IPM platform

  • To help founder entrepreneurs attract additional management talent and build the necessary infrastructure to support rapid growth

 

Accomplishments
Developed Infrastructure to Support Rapid Growth: Sentinel helped the founding physicians expand NSPC’s business development function, significantly enhancing NSPC's growth pipeline and strengthening its capabilities to open de novo locations and systematically source, execute, and integrate affiliations. NSPC also developed standardized KPIs and implemented sophisticated IT and electronic health record systems to streamline practice management and position operating managers to be proactive rather than reactive.

Bolstered NSPC's Management Team: To serve a rapidly growing group of affiliated clinics, Sentinel and the founders hired experienced healthcare services executives, including a CEO and CFO, to help bring best practices to NSPC and to free up the founders to focus on doctor relationships and new business development.

Implemented an Aggressive Growth Strategy: Shortly after closing, NSPC completed an add-on in Virginia that doubled its size and transformed NSPC into the largest, multi-state IPM practice in the nation. Over the next five years, NSPC opened 15 de novo offices and completed eight more add-on acquisitions in Connecticut, New Jersey, New York, North Carolina, West Virginia, and the District of Columbia.

Outcome
Under Sentinel's ownership, NSPC's clinic base grew more than sevenfold, from nine clinics in one state to 69 clinics in seven states, and its revenues increased five-fold. In June 2017, having accomplished our investment objectives, NSPC was sold to another private equity firm in a highly successful transaction for Sentinel and its management partners.

Northeast Dental Management Inc.

Healthcare

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Helping Entrepreneurs Realize a Bold Dream


Company: Northeast Dental Management Inc.

Position: Healthcare

Location: Paramus, New Jersey

Date of Investment: April 2012

Exit Date: January 2016


Company Description
Northeast Dental is a multi-unit dental service organization with affiliated clinics in seven states along the “Amtrak Corridor” stretching from Virginia to Massachusetts. NEDM provides administrative staffing, human resources, purchasing, financial, and IT support services to 65 locally-branded dental offices. NEDM's affiliated offices provide high quality dental care to 200,000 patients annually and offer a full suite of best-in-class general and specialty dental services, including general dentistry, oral hygiene, oral surgery, periodontics, pedodontics, and orthodontics.

Background
NEDM was founded by Dr. Craig Abramowitz in 2003 when he acquired a single office in New Jersey from a large publically-traded dental service organization. Dr. Abramowitz saw the opportunity to build a regional dental service organization in the Northeast, an area where the dental practice industry was highly fragmented and lagged the consolidation trends in other parts of the country. Dr. Abramowitz and his team grew NEDM through acquiring several multi-office practices in adjacent states, and by 2012, NEDM had grown to 29 affiliated offices in New Jersey, New York, Pennsylvania, and Virginia. At that point, Dr. Abramowitz’s private equity partner was ready to monetize its investment and gave him the opportunity to find a new partner to help continue NEDM’s growth. Dr. Abramowitz selected Sentinel because of our established record of successfully investing in the dental services sector and the strong relationship we had built with him and NEDM’s management team.

The Opportunity

  • To partner with a highly motivated executive with a record of success and establish NEDM as the leading dental service platform in the Amtrak Corridor

  • To help an experienced entrepreneur attract additional management talent and build the necessary infrastructure to support rapid growth

 

Accomplishments
Developed Acquisition Infrastructure to Support Rapid Growth: Sentinel helped Dr. Abramowitz expand NEDM’s business development function, significantly enhancing NEDM’s acquisition pipeline and strengthening its capabilities to systematically source, execute, and integrate affiliations.

Supported an Aggressive Growth Strategy: Under Sentinel’s ownership, NEDM completed 24 new add-on acquisitions while substantially growing its future affiliation pipeline. NEDM increased its office density in existing states and expanded its footprint into the adjacent states of Connecticut, Maryland, and Massachusetts.

Strengthened NEDM’s Office Support Capabilities: To serve a rapidly growing group of affiliated dental practices, Sentinel and Dr. Abramowitz worked together to further develop NEDM’s back office infrastructure as well as add additional talent in finance, purchasing, IT, and marketing. NEDM also implemented a new, integrated IT system that simplified reporting and streamlined data analytics.

Outcome
Under Sentinel's ownership, NEDM grew its base of affiliated offices from 29 to 65, added three new adjacent states to its geographic footprint, and more than doubled its revenue and EBITDA. In January 2016, having successfully accomplished our investment objectives, NEDM was sold to strategic buyer Dental Care Alliance in a highly successful transaction. As part of the transaction, Dr. Abramowitz maintained an ownership stake in the combined business and became a senior executive at Dental Care Alliance, an organization that supports more than 230 dental practices in 12 states.