Harvest Partners

FCX Performance, Inc.

• Business

  FCX Performance (“FCX”) is a leading distributor of highly engineered valves, instrumentation & pumps and provider of related services in the U.S. FCX provides technical, mission-critical products and value-added services to more than 15,000 end users, original equipment manufacturers and engineering and construction firms across the industrial process, oil and gas, power, life sciences, municipal and commercial markets. The Company is known for its technical application expertise and offers customers a full range of valves and automation, pumps and seals, process instruments, steam and piping products, and related equipment, all backed by a full complement of life-cycle services.

• Situation

  Harvest became aware of FCX in early 2012 through Harvest’s business development activities in the industrials and distribution sectors. Harvest had substantial knowledge of FCX’s core process and energy end markets through prior industrial services investments such as Aquilex and BHI, and developed expertise in industrial distribution through investments in TruckPro and CSC. Prior to the management meeting, Harvest hosted an in-person presentation by the banker on FCX at its offices and completed numerous calls with industry participants via its network. As a result of this prior work and experience, Harvest was well-prepared for the management meeting, developed a strong rapport with management and was able to complete thorough diligence ahead of other potential buyers. This strategy enabled Harvest to deliver a fully-financed final bid without syndication risk that positioned Harvest as the buyer of choice.

• Harvest Partners Investment

  In October 2012, Harvest purchased FCX with the existing management team. To fund the acquisition Harvest arranged the debt financing, which included a senior credit facility and a mezzanine note. In addition, Harvest underwrote and syndicated equity co-investment capital.

• Investment Thesis

  • Attractive, differentiated position in supply chain
  • Stable, recurring business model with solid cash flows
  • Diverse end markets and customers
  • Scalable platform with strong infrastructure

• Value Creation

  • Successfully completed 13 add-on acquisitions
  • Improved organic growth by expanding salesforce and increasing productivity
  • Increased gross margins via pricing initiatives and aligning salesforce compensation plans
  • Incorporated additional value-added services such as integration and calibration
  • Improved operating leverage by consolidating facilities and managing indirect spending
  • Managed succession and expanded management team with several key senior executive hires

• Outcome

  • Sold to Applied Industrial Technologies (NYSE: AIT) in January 2018