Succession Plans
Spinrite is the leading designer, manufacturer, and marketer of consumer craft yarn products in North America. Spinrite is well known to the hobby market for its Bernat, Patons, Caron, Peaches & Crème, Lily Sugar’n Cream, and Phentex brands, which are sold through mass merchants, craft stores, and independent specialty stores.
Background
Spinrite was founded in 1952 in Ontario. Following the death of the founder in the mid-1980s, his son inherited and assumed leadership of the business.
Spinrite is located in a rural community where the company is the largest employer and the owner and his family are well known to and deeply involved in the local community. With a significant portion of the family’s net worth invested in Spinrite, they decided to sell a majority stake to a financial partner so they could diversify their holdings and implement a succession plan for the owner, who had reached retirement age. Following a limited round of bidding by potential financial partners and an extensive due diligence process conducted by the owner and his advisors on the small group of potential financial partners, Sentinel was selected as his preferred partner.
Opportunity
- To acquire a category leader with the most comprehensive brand portfolio in the craft yarn segment
- To partner with Spinrite’s owner and committed and experienced management team
- To invest in an industry with strong projected category growth due to the aging of the baby boomers and increased number of younger knitters
Accomplishments
Completed a Smooth Ownership Transition: Spinrite made a smooth ownership transition after more than 50 years of family ownership.
Implemented a Smooth CEO Transition: Following the closing, Sentinel and the former owner successfully recruited a new CEO with deep experience and a proven record in the consumer products industry. After a brief transition where the new CEO worked seamlessly with the founder, the founder was able to retire.
Achieved Growth Objectives: In a short period, Spinrite grew substantially by capitalizing on category growth, introducing new products, and increasing its share of the retail channel.
Outcome
By 2005, Sentinel and management had achieved the growth objectives established at the outset. Spinrite completed an IPO on the Toronto Stock Exchange in a highly successful transaction for Sentinel, management, and the former owner.
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.