Category Archives: strategy

Investment Philosophy

Ira KleinmanPartner
  • Capital preservation

    We believe that a balanced risk-return approach that emphasizes stable returns and capital preservation over “higher beta” transactions will provide greater and more consistent returns to our investors and the management teams that operate our businesses. The critical elements of the Firm’s approach to achieve its mission are:

    • Careful asset selection driven by a disciplined due diligence process
    • Proactive targeting of attractive industry sectors
    • Engagement of all professionals at every stage of the investment cycle
    • Developing and driving a value creation strategy
    • Proactive partnership with strong management to achieve a company’s full potential
    • Genuine commitment to the highest standards of business practices and ethics as reflected in our ESG Policy

    Harvest believes that its comprehensive investment approach enables us to recognize and capitalize on an investment’s upside while limiting losses.

  • Collaborative partnering

    We believe the foundation of any portfolio investment is its operating management. We do not manage businesses ourselves nor do we simply invest in business plans. We seek proven operators and managers with the skills and personal commitment to drive a company to succeed.

  • Judicious risk management

    Risk management and preservation of capital has always been a key objective. We achieve this through:

    • Our comprehensive investment approach
    • Conservative capital structures
    • Partnership with skilled management teams
    • Incorporation of Principles for Responsible Investment into our diligence and portfolio management processes
  • Discipline

    First and foremost, Harvest is a disciplined investor. For us, this means an unwavering focus on our core competencies and investment approach. We invest in middle market companies in our core areas of expertise and are steadfast in our return requirements throughout market cycles. We believe that this disciplined approach has been a primary driver of the firm’s success in achieving superior returns with low volatility.

Investment Criteria

We seek to partner with strong management teams to acquire leading middle market companies that have the potential to grow faster than the industries in which they participate.

Michael DeFlorioChief Executive Officer
  • We’re looking for

    Harvest Partners seeks to invest in good businesses that we believe have high potential to benefit from the firm’s value creation approach. We prioritize proprietary or unique opportunities that capitalize on one or more key investment themes.

    • Market leadership position in large end markets;
    • Recurring revenue driven business model;
    • Defensible barriers to competition;
    • High free cash flow;
    • Control investment; and
    • Strong management team

    In addition, a Harvest Partners Investment will typically include two to three identifiable and actionable value creation opportunities, such as transformative acquisitions, business strategy enhancements, operational improvements or management augmentations.

    Harvest focuses on four key industry verticals:

    • Business & Industrial Services
    • Consumer
    • Industrials
    • Healthcare
    • Software
  • Middle market specialists

    Harvest is well-established in the middle market, having invested in it for over 40 years. We believe middle-market companies often have greater:

    • Potential for value creation and growth
    • Opportunities for financial sponsors to add value
    • Financial resources to attract quality management
    • Variety of exit opportunities

Investment Parameters

We seek opportunities where our capital and expertise can facilitate the transformation of a middle-market company into a larger business.

Steve EisensteinPartner
  • Harvest targets investments in the middle market with the following characteristics:

    Key Criteria
    • Market leadership position in large end markets
    • Barriers to entry, recurring revenue, high free cash ­flow
    • Talented management teams
    Industries
    • Business & Industrial Services
    • Consumer
    • Industrials
    • Healthcare
    • Software
    Select Investment Themes
    • Auto Aftermarket
    • Building Products
    • Environmental Services
    • Facilities Management
    • Financial Services
    • Food and Beverage
    • Franchises
    • Human Capital Management
    • Infrastructure Services
    • Insurance Brokerage
    • Legal and Compliance
    • Logistics
    • Maintenance and Repair
    • Multi-Site Healthcare Providers
    • Outsourced Services
    • Packaging
    • Payor Services
    • Pharma Services
    • Specialty Chemicals
    • Specialty Distribution
    • Tech-Enabled Business Services
    • Testing and Measurement
    • Utility Services
    Target Size
    • $100 million – $3 billion in Revenue
    • $30 million – $300 million in EBITDA
    • $300 million – $5 billion in Enterprise Value
    Transaction Types
    • Private company recapitalizations and buyouts
    • Partnering with entrepreneurs to provide capital for expansion
    • Generational transitions
    • Public-to-private transactions
    • Corporate carve-outs
    • Industry consolidations

Industry Expertise

Tom ArenzPartner
  • Business Services & Consumer

    Harvest seeks to acquire service businesses with defensible business models and recurring revenue streams that are positioned to benefit from secular changes, outsourcing trends and/or consumer behavior in their industry or end markets. We believe that many of the companies in this sector will benefit from the following trends:

    • Outsourcing non-core functions
    • Shift from fixed cost to variable cost labor
    • Leaner and more efficient cost structures
    • Increasing complexity of business processes
    • Aging demographics
    • Focus on health / wellness

    Since 2000, Harvest has made several investments in this space. Click here to see Harvest’s Business Services & Consumer investments.

  • Healthcare

    Harvest seeks to acquire healthcare businesses with attractive growth strategies in large, fragmented healthcare markets that are positioned to benefit from continuing secular tailwinds and face low reimbursement and reform risk. We believe that many of the companies in this sector will benefit from the following trends:

    • Aging population
    • Complexity around reform
    • Rapidly increasing cost of care
    • Highly fragmented sectors
    • De novo growth opportunities
    • Manageable reimbursement risk
    • Huge opportunity for efficiencies

    Since 2000, Harvest has made several investments in this space. Click here to see Harvest’s Healthcare investments.

  • Industrial Services

    Harvest seeks to acquire well-positioned service businesses with recurring revenue streams that benefit from secular changes and/or outsourcing trends in their end markets and in which the cost of failure materially exceeds the cost of service. We believe that many of the companies in this sector will benefit from the following trends:

    • Aging infrastructure
    • Shortage of qualified personnel
    • Increased outsourcing
    • Preference for fewer vendors
    • Heightened focus on profitability
    • Prohibitive cost of downtime
    • Increased focus on safety
    • Stricter regulations
    • Sustained historical underinvestment

    Since 2000, Harvest has made several investments in this space. Click here to see Harvest’s Industrial Services investments.

  • Manufacturing & Distribution

    Harvest seeks to acquire well-positioned companies with stable cash flows, diversified income streams and multiple cycle-independent value creation levers. We believe that many of the companies in this sector will benefit from the following trends:

    • Shift to lean manufacturing
    • Global/JIT supply chain
    • Focus on service versus price
    • Emphasis on energy efficiency and environmental compliance
    • Preference for repair versus replace solutions

    Since 2000, Harvest has made several investments in this space. Click here to see Harvest’s Manufacturing & Distribution investments.

Transaction Sourcing

Our deep sector knowledge, industry network and commercial approach has built significant credibility with executives and intermediaries, helping to generate unique investment opportunities.

Stephen CarlsonPartner
  • Thematic investing

    A core element of Harvest’s investment strategy is to identify industry sectors with attractive secular trends and invest in companies positioned to benefit from those trends. The Firm researches industry verticals and develops investment themes targeting the most attractive segments within those verticals.

  • Relationship sourcing

    The sourcing program is driven by Harvest’s well-developed network of financial intermediaries and industry executives. Harvest’s sourcing efforts have led to many internally generated proprietary opportunities and investments.

  • Seeking competitive advantage

    While Harvest does not avoid competitive situations, it will only participate in them if its investment professionals believe that the Firm will either have or can develop a differentiated point of view.

Partnering with Management

We are extremely focused on building long-term relationships with our management teams. Many of the CEOs of our former portfolio companies maintain an ongoing relationship with Harvest today.

Jay WilkinsPresident
  • Active support

    A key characteristic of a prospective Harvest Partners investment is a requirement that the target company have an experienced and skilled management team. Harvest then actively partners with that team, offering strategic and operational guidance and identifying and developing opportunities for value creation and equity growth.

  • Expert resources and specialists

    In addition to its internal capabilities, Harvest has developed an extensive network of best-in-class improvement resources including operating, strategic and systems experts. Harvest leverages this network to engage these resources to support a management team in achieving specific value creation or operational initiatives.

  • Growth through acquisition

    Harvest has also been successful at creating value at portfolio companies by working closely with management to make acquisitions that expand or improve the addressable markets, product or service offerings or competitive positioning of each of its companies. For portfolio companies where acquisitions are identified as a value creation opportunity, Harvest will reserve follow-on capital to support this initiative.

    Click here to see Harvest’s investment Case Studies.

Value Creation

We pride ourselves on digging deeply into businesses to identify opportunities that others may not see.

Andrew SchoenthalPartner

  • Identifying value creation levers

    During the due diligence process, Harvest identifies key drivers of value creation including:

    • Business strategy improvements
    • Transformative acquisitions
    • Operational improvements
    • Management augmentations
  • Value Creation Blueprint (“VCB”) for success

    At the outset of an investment, Harvest works closely with management to create a plan for value creation which includes strategic positions, business optimization, and a review of executive and board level needs. During the course of Harvest’s investment the VCB is updated and modified to measure progress on milestones and key initiatives.

  • Ongoing interaction

    After closing, Harvest has extensive interaction with each portfolio company and its management team. This includes frequent, informal meetings and conversations as well as board meetings and other strategic planning sessions. In addition, we often provide assistance to portfolio companies for support on special projects or initiatives.

  • Experienced Board of Directors

    Harvest works with the management of each portfolio company to recruit an experienced board of directors that will provide management with strategic advice, industry perspective and access to relevant contacts. Portfolio company boards generally include three to four outside directors. These outside directors often serve as valuable resources and sounding boards for management teams as they navigate the evolution of their businesses and industries.

Approach to Investment Liquidity

Our approach to achieving liquidity on our investments is both flexible and collaborative, we seek to take advantage of attractive market dynamics when they exist and also to build consensus among all stakeholders, including owners, managers and employees to maximize the result for all.

Paige DalyPartner
  • Flexible timetable

    Our hold periods are influenced by multiple factors including prevailing market conditions, the state of the industry, and potential for future value creation. In addition, as patient investors, we allow each investment to mature at a natural pace. Our goal is to hold investments for three to seven years.

  • Multiple exit scenarios

    Before making an investment Harvest evaluates and assesses potential exit alternatives, including initial public offerings, M&A transactions and recapitalizations. During our investment period, Harvest monitors the activity in each of these markets and maintains contact with intermediaries and principals that are likely to fund or influence our exit. When attractive market dynamics exist, we evaluate exit scenarios with management and seek to maximize the result for all stakeholders.

    Click here to see Harvest’s investment Case Studies and related approach to Liquidity.