Corporate Carveouts
Alemite was founded in 1919 and became the leading global supplier of industrial lubrication equipment and components, including grease fittings, grease guns, pumps, reels, and related automated lubrication systems. In the early 1920s, Alemite invented the hydraulic grease fitting, and established itself as the leading provider of lubrication products to industrial manufacturers and automotive repair centers.
Background
Alemite was owned by Invensys plc, a British multinational conglomerate. During the 2001–2002 recession, Invensys, then highly leveraged, encountered financial difficulties and decided to divest certain noncore businesses, including Alemite. Sentinel was introduced to the transaction by a boutique M&A advisory firm that had been retained by Invensys to sell Alemite.
After a limited auction process, Sentinel was selected based on our longstanding relationship with the principals of the M&A boutique and their trust that we would be able to close in the midst of a recession where the economic outlook following the attacks of 9/11 remained uncertain.
Opportunity
- To acquire an established 80-year-old industrial lubrication equipment brand
- To invest in a platform business with a long history of profitability and sustainable operating economics
- To partner with Alemite’s committed and highly experienced management team who coinvested alongside Sentinel
Accomplishments
Smooth Transition to a Fully Standalone Business: Together with management, Sentinel helped implement a standalone IT and financial accounting system and put in place significant equity and pay-for-performance incentives to promote an entrepreneurial culture.
Revitalized Product Development: Sentinel worked closely with management to revitalize new product development, which prior ownership had curtailed to maximize cash flow.
Entered New Markets: Alemite’s management drove sales growth by entering complementary end markets with new, innovative products.
Outcome
During the 3½ years Sentinel owned Alemite, profitability grew by more than 33%. In 2005, Sentinel received an unsolicited approach from a private equity firm that owned Lincoln Industrial Corporation, another industrial lubrication equipment supplier. We concluded that the timing was opportune to sell Alemite because market conditions for selling businesses were robust and Sentinel had achieved its investment objectives. In January 2006, in a highly successful transaction for Sentinel and management, Alemite was sold to Lincoln, creating a global category leader.
Case studies have been selected for illustrative purposes for management teams of midmarket companies considering a partnership with Sentinel and should not be considered an offer or solicitation of services or an actual or implied endorsement of Sentinel or any security, investment, or portfolio company. The portfolio companies highlighted are not representative of all current and prior investments of Sentinel. A list and description of investments since Sentinel’s inception is available on this website.