Management Buyouts

In 2001, a private equity firm acquired Chromalox from Emerson Electric in a carveout transaction. After several years of uneven performance, in 2007, a new CEO was hired to implement a strategic repositioning. In 2012, Sentinel made an offer when Chromalox was put up for sale in an auction process that ended with Chromalox agreeing to be sold to a strategic buyer. When that deal fell apart, Sentinel was given another opportunity due to our strong relationship with the investment bank managing the sale, the close rapport we had established with Chromalox’s CEO and team, and our record of following through on our commitments. We moved very quickly to secure and close the transaction.

• To partner with Chromalox’s talented and committed management team and benefit from a resurgence in Chromalox’s end markets, which our due diligence concluded was likely to accelerate
• To execute management’s proven growth strategy—selling complete solutions, focusing on high-margin products, and improving profitability by consolidating and optimizing operations

Built Strong Partnership with Management: Sentinel worked closely with the CEO to establish an incentive program to provide management with significant financial upside if Sentinel’s investment in Chromalox had a successful outcome. Management was energized to be working with us and toward substantial equity appreciation.

Accelerated International Growth Strategy: Sentinel worked with management to open a sales office in Germany and a facility in China to give Chromalox better access to the fast-growing Asian market.

In under three years, Chromalox’s revenues increased by 25% and EBITDA grew by more than 70%. Having accomplished our investment objections, Sentinel sold Chromalox in 2012 to another private equity firm in a successful transaction for Sentinel and our management partners. Our management partners continued to own a meaningful equity position and to run the business following the sale.