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.

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

Harvest targets investments in the middle market with the following characteristics:

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.

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.

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.

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.