Helping Entrepreneurs Realize a Dream
TranSystems is a leading provider of engineering, architectural, and design consulting solutions for U.S. transportation end markets. TranSystems plans, inspects, designs, and provides related services to some of the most complex transportation infrastructure projects in the country. With more than 1,800 engineers and technical employees working from 71 strategically located offices, TranSystems serves a diverse client base across the public and private sectors, including government, freight, transit, aviation, and intermodal end markets. TranSystems’ expertise includes award-winning design and engineering work on bridges, highways, tunnels, railroads, airports, and multi-modal facilities.
Background
Before Sentinel, TranSystems was owned by a group of current and former employees and an Employee Stock Ownership Fund (“ESOF”). Over time, the ESOF’s required stock redemptions constrained TranSystems’ ability to grow. In 2020, TranSystems hired an investment bank to find a financial partner who could recapitalize the company and position it as a well-capitalized platform to consolidate its highly fragmented industry. Sentinel was selected as the buyer because of our relevant experience investing in engineering and consulting businesses, our record of helping similar businesses scale rapidly through accretive acquisitions, and the strong chemistry we developed with management..
Challenge
- To partner with TranSystems’ highly experienced, committed management team and deep bench of employees, who invested meaningfully alongside Sentinel and continued to lead the business
- To acquire majority interest in a market leader with a well-established brand and a long history of success and steady growth
- To capitalize on TranSystems’ leadership position by making strategic acquisitions that expanded its suite of services and geographic presence
- To participate in the transportation infrastructure industry’s growth, which is being driven by heavy public spending at federal, state, and local levels
Accomplishments
Accelerated Growth Through M&A: Sentinel closely collaborated with management to build a robust acquisition pipeline. In three years, TranSystems made seven add-ons that expanded the company geographically and brought new synergistic service offerings.
Built a Strong Partnership with Management: Sentinel established a strong and productive relationship with TranSystems’ management and employees. More than 280 employees, many of whom were the founders of legacy engineering firms that had combined to create the TranSystems platform, coinvested.
Exceptional Financial Performance: During Sentinel’s ownership, TranSystems’ sales and profits more than doubled, fueled by strong organic growth from market share gains and cross-selling from acquisitions.
Outcome
Having accomplished our investment objectives in under four years, Sentinel and management sold TranSystems through a mutually beneficial merger with an industry peer owned by another private equity firm. In a highly successful transaction for Sentinel and management, the combination created an industry leader in transportation infrastructure services and the #7 transportation firm based on Engineering News-Record’s rankings, up from #21 at the time of Sentinel’s investment.