Accelerating Multi-Unit Expansion

Sentinel was introduced to the opportunity by independent sponsor Princeton Ventures, who had developed a relationship with Massage Envy’s CEO. Princeton approached Sentinel because of our experience in growing franchise brands and proven record closing transactions.

To accelerate the growth of a proven franchise concept by implementing and executing strategies to recruit new franchisees, grow the number of clinics, and expand the brand nationwide

Identified Optimal Locations: Sentinel worked closely with management to make a significant investment in software and management talent to identify real estate locations with a high likelihood of success. This initiative enabled Massage Envy to more than double its annual openings while maintain its almost-zero new clinic failure rate.

Created Financing Program to Accelerate Unit Growth: Sentinel secured a dedicated financing program to accelerate new unit growth during the very difficult debt financing market following the 2009 recession. This program enabled franchisees to open more than 36 units during a period when access to debt markets was seriously curtailed.

Optimized Clinic Operations and Introduced New Service Offerings: During our ownership, we assisted management in analyzing how to enhance member retention, increase capacity utilization, and reduce therapist turnover. We also worked with management to launch facial treatments to augment core massage therapy services. These initiatives accelerated sales growth, materially enhanced unit-level economics and franchisee profitability, and widened Massage Envy’s industry leadership position.

Augmented Management Team: Sentinel worked with senior management to recruit additional marketing and development executives and broaden and deepen Massage Envy’s overall management team. The new executives hired were smoothly integrated into the company and strengthened the infrastructure needed to sustain Massage Envy’s rapid growth.

During Sentinel’s approximately three-year ownership, Massage Envy grew from approximately 600 to nearly 850 operating clinics with a backlog of more than 270 clinics waiting to open. Systemwide sales nearly doubled, and the average unit volume increased more than 40%. This drove strong financial performance at Massage Envy, with revenue and EBITDA almost tripling. In 2012, Massage Envy was sold in a management buyout to another private equity firm.