Harvest Partners

Associated Materials, Inc.

• Company Description

  Associated Materials, Inc. (“AMI”) was a vertically integrated manufacturer and value added distributor of exterior residential building products. The company’s core products included vinyl windows, vinyl siding, aluminum and steel siding and accessories. Products were sold on a wholesale basis through the company’s dual-distribution network in the United States and Canada, consisting of more than 120 owned supply centers and approximately 250 independent dealers.

• Situation

  Harvest sourced AMI through a take-private transaction managed by a sell-side advisor. Harvest had targeted the building products industry in 2001 and had validated several of the growth drivers benefitting AMI before the company announced it was for sale. The equity needed to fund the transaction was substantially greater than what Harvest could fund, which made the Firm’s industry knowledge and proven ability to raise co-investment capital critical in Harvest being chosen to acquire the business. Harvest gained management’s confidence by developing detailed post-acquisition value-building initiatives.

• Harvest Partners Investment

  In April 2002, Harvest purchased AMI with the existing management team. To fund the acquisition Harvest arranged the debt financing, which included a senior credit facility and a high yield bond financing. In addition, Harvest arranged equity co-investment capital for the transaction.

• Investment Thesis

  • Market leader
  • Vertically integrated business model
  • Reputation for high levels of customer service
  • Favorable industry dynamics
  • Significant margin improvement opportunities

• Value Creation

  • Divested non-core AmerCable subsidiary
  • Headquarters consolidation
  • Acquired Gentek
  • Implemented substantial operational improvements

• Outcome

  • Completed a dividend recapitalization in March 2004, a recapitalization with Investcorp in December 2004, and a sale to Hellman & Friedman in October 2010