Frequently asked questions about our investment strategy and philosophy, operations, and approach
What should one look for in a private equity firm?
Choosing a private equity partner is an important decision with long-term implications. We believe that entrepreneurial executives should identify an investment partner with a compatible philosophy and strategic outlook, the ability to add value, a record of success, and sterling character. Entrepreneurs should feel comfortable conducting their own due diligence on the private equity firm as part of the evaluation process.
What is Sentinel's investment strategy?
We have a focused investment strategy, key elements of which include:
Backing strong, talented, and committed management teams who have a long-term outlook and stand to share meaningfully in the rewards of their success.
Participating only in friendly, negotiated transactions.
Investing in businesses with solid fundamentals.
Pursuing investment opportunities that we believe are likely to generate attractive risk-adjusted rates of return.
Targeting industries that correspond to our direct experience and ability to add value.
What is Sentinel's area of focus?
We invest in lower middle market businesses in industries where our investment professionals have relevant experience. These include aerospace/defense, business services, consumer products/services, distribution, food/restaurants, franchising, healthcare, and industrials. For platform investments, we seek companies with up to $65 million in EBITDA and enterprise values ranging from $70 million to $400 million. For add-on or tuck-in acquisitions for existing portfolio companies, we will consider businesses with EBITDA as low as $1–2 million. See Investment Focus for more information about our investment criteria.
What type of transaction does Sentinel prefer?
Our greatest strength lies in helping established companies reach their next level of growth. We prefer to invest in management buyouts, recapitalizations, corporate divestitures and carveouts, acquisitions of family businesses, industry consolidations, and going-private transactions in partnership with management teams who share a long-term perspective. We also invest in special situations, including balance sheet restructurings and operational turnarounds.
What is Sentinel's average equity investment?
Our equity investments range from $25 million to $175 million, depending on the needs of the company and opportunity presented. Our preferred range is between $40 million and $125 million.
Does Sentinel pay referral fees?
Yes. Our business relies on having attractive investment opportunities to consider and choose from. We welcome your showing us new deal opportunities and, where appropriate, we do pay fees for referrals upon the closing of transactions. Sentinel has a 16-year history of honoring arrangements with brokers and finders.
Does Sentinel need to be the sole institutional investor, or will you co-invest with another private equity firm?
We choose to make a small number of larger investments in order to bring focus and commitment to each relationship. As a result, we have been the sole or primary investor in most of our transactions. From time to time, however, we have and will invest alongside other private equity firms or fundless sponsors with particular operational or industry expertise.
Does Sentinel always seek board representation? Does Sentinel manage portfolio businesses?
We do require board representation. However, we do not interfere with the day-to-day management of our portfolio companies, nor do our employees go on the payrolls of these businesses. As board members and shareholders, we act as advisors and confidants to senior management on strategic matters. In addition, we frequently help identify and advise on acquisitions, optimize balance sheet capitalization, and develop incentive compensation plans. Working with our portfolio companies at the board level allows us to make the maximum contribution to their success. We deliberately make a few larger investments so we can commit considerable time and resources to each company in our portfolio. Our investment strategy ensures that our companies and management partners get the attention and support we believe they deserve.
Who are Sentinel's investors?
Our investors include prominent institutions, endowments, foundations, state and government pension systems, corporations, and high-net-worth families based in the United States, Canada, Europe, and the Pacific Rim. Having forged close and productive relationships with many of our investors, we benefit from a two-way flow of ideas, information, and contacts. In many transactions, one or more of our investors have participated in various layers of the target-company's capital structure, creating important strategic advantages for our management partners. See Investment Focus for more information.
What is the best way to reach someone at Sentinel? Do I need an introduction?
We welcome investment opportunities and your inquiries. You are welcome to e-mail or call us. A referral from an industry contact or friend of the firm is helpful but not necessary. Contact information for Sentinel Capital Partners can be found at Contact Sentinel.
How can I be sure Sentinel will keep the information I share confidential?
We believe that successful investment partnerships are based on mutual trust. As such, we zealously protect our reputation for professionalism and integrity. We will always respect the confidentiality of our discussions with you. After hearing or reading a brief description of the opportunity, Sentinel will sign a confidentiality/nondisclosure agreement.
What information do you find most helpful in evaluating an investment opportunity?
A complete investment memorandum or business plan is the most useful document. A concise executive summary usually gives us sufficient information to make a preliminary evaluation. While we do not require any particular format for submissions, to ensure a prompt and decisive response, your proposal should include the answers to these questions:
What are your company's products/services?
Who are your customers?
What is your growth strategy?
What is your company's market/competitive position?
Who are your current competitors?
What unique competitive advantages does the company possess?
Who are the key managers, and what is their relevant experience? (Please include key bios.)
What is your current capitalization structure? (Please list owners and ownership percentages.)
What are the company's current revenue and profitability?
What is the company's historical five-year financial performance?
What are the company’s financial projections for the next five years?
How long does it take Sentinel to make a decision?
You can generally expect to hear back from us within a few days after submitting an investment opportunity. While we believe in thorough due diligence, this does not prevent us from moving quickly when necessary. Depending on the complexity of the situation and the type of transaction, we often are able to make a binding investment decision in less than 45 days and generally can close as soon as 15 days after that.
What factors influence Sentinel's investment decision?
While we recognize that there is no single determinant of success, our investment assessment typically focuses on two core areas: (i) the capabilities of the management team and (ii) the prospects for sustaining and defending the company's revenue and profit formula. We have found that our interactions with management during the decision-making process also play a key role. See Investment Focus for more information.
What is involved in the due diligence process?
Our due diligence process typically includes (i) an examination of key current customers and suppliers, (ii) a verification of the differentiation of your product or service, (iii) an evaluation of industry competitive dynamics, (iv) a review of historical and projected financial performance, and (v) an assessment of the strength of the management team.
What is Sentinel's preferred exit strategy?
We approach every investment opportunity expecting and working toward a highly successful result. We consider a range of exit strategies, such as sales, mergers, recapitalizations, and initial public offerings. Each exit decision is made through a careful evaluation done jointly with management and takes into account the optimal strategic interests of the company's employees, customers, suppliers, and investors.
What is Sentinel's investment horizon?
Sentinel is a long-term investor. Our investment horizon is usually between five and seven years, although we have the ability to hold an investment for up to 10-years. Our fundamental goal for each portfolio company is to build intrinsic long-term value through responsible operation of the business. Few of our competitors can match our record of supporting management teams and companies.