Succession Plans
At the time of our purchase, Cottman was a leading franchisor of automotive transmission centers that repaired, remanufactured, and serviced transmissions. Cottman, the ”Transmission Physician,” opened its first transmission repair center on Cottman Avenue in Philadelphia in 1962, and when Sentinel sold the company, had approximately 400 centers in the United States and Canada.
Background
Sentinel acquired Cottman from the company’s three owners, who were seeking liquidity for estate planning purposes and looking to transition out of the business. Cottman’s owners purchased the business from its founder in 1979 and, over the next two decades, they tripled the number of centers and increased revenues tenfold. During their ownership, Cottman earned numerous franchising industry awards.
Opportunity
- To acquire the second-largest, fastest-growing automotive transmission repair system in the United States
- To purchase a proven and well-established brand with strong market position that was poised to continue growing
- To partner with a young and ambitious incumbent management team who had not yet established personal wealth
Accomplishments
Completed a Smooth Transition to Sentinel Ownership: Cottman was a 20-year-old business that had been actively managed by three owners who exited at closing. We worked closely with newly appointed CEO Todd Leff, who had been at Cottman for 10 years, to ensure a smooth transition.
Accelerated Growth Strategy: To position Cottman for accelerated growth, Sentinel helped Mr. Leff recruit two experienced executives as COO and CFO to replace two of the retiring founders. We also helped management upgrade Cottman’s IT infrastructure and refine their strategic growth plan, which included greatly accelerating growth by focusing on select underdeveloped markets in which leading competitors had not yet firmly established themselves.
Outcome
During Sentinel’s 4½-year ownership, Cottman doubled the number of franchisees in its system and expanded into new regions in which it successfully established fortress market positions. Sales grew significantly and profitability more than doubled. In April 2004, Sentinel sold its stake in Cottman in a second management buyout to financial services firm American Capital Strategies. Under leadership of the team Sentinel had backed, Cottman continued to grow and subsequently acquired AAMCO, its largest competitor, to become the U.S. category leader in transmission repair.
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.