Dealing with Unexpected Bad News

On the evening of Friday, September 4, 2009, four days after Sentinel made a follow-on investment in LTI Boyd, a fire destroyed its Newnan, Georgia facility, resulting in a total loss of the building and equipment. Fortunately, no one was in the building and no one was injured.

The fire destroyed LTI Boyd’s office building, computers, and production equipment, rendering the company unable to produce a major portion of its product line. As a result of the supply interruption, LTI Boyd’s customers—predominantly large, multinational OEMs—risked having to shut down their own production lines. Further compounding the crisis was that LTI Boyd was in the midst of integrating a recent tuck-in acquisition and establishing relationships with many new customers. Under these circumstances, retaining customers—especially new ones—posed a significant challenge.

Stabilized the Business: By the next afternoon, the Sentinel deal team had identified a consultant that specialized in managing property casualty events. Together, we immediately initiated discussions with LTI Boyd’s insurance carrier, who advanced $1 million of property and casualty insurance within seven days of the fire. LTI Boyd would ultimately go on to receive more than $13 million in property and casualty and business interruption insurance to completely replace its facility and fund business operations.

Outsourced Manufacturing: Within a week of the fire, we had replaced LTI Boyd’s computer servers and began to reach out to customers as well as potential suppliers who could assist with outsourced manufacturing. Over the the next three weeks, LTI Boyd outsourced hundreds of components to supply its more than 200 customers, established logistics supply arrangements, and began re-shipping products to its multinational customer base. LTI Boyd never caused a shutdown of an OEM customer’s production line.

Rebuilt Facility: Within three months of the fire, LTI Boyd had signed a lease for a new facility in nearby Fairburn, Georgia. Three months later, LTI Boyd was producing in its new Fairburn facility, and within nine months of the fire, all production was back in-house. During this tumultuous time, LTI Boyd retained more than 95% of its customers. LTI Boyd’s Fairburn facility is best-in-class, and the company is the go-to provider for many of the world’s leading OEMs.

After successfully managing the business following the fire, LTI went on to complete a transformational acquisition that more than doubled its size. With LTI having achieved significant growth over the six-year investment period, Sentinel sold the company in 2012 to another private equity firm in a highly successful transaction.