Source Talks ep. 34

Source Talks is a series where we discuss deal origination with expert PE and M&A pros. In this interview, David Toll of catches up with David Harvey of Harvey & Company LLC about the boom in add-on acquisitions over recent years, and PE’s increasing interest in European transactions.

David, tell us about the work you do at Harvey & Company.

And our firm, we are an acquisition search, or a buy side advisory firm helping private equity funds in their portfolio companies identify proprietary and strategic acquisitions and investments.

Dave, how busy have you been this year at your firm and, and what’s behind that?

Last year our business doubled to the point where, even though at that point we’d been in business 24 years, we only had a quarter of our deals close compared to 2021. So we went into 2022 just hoping that we would get back to that same level. And so far this year, we’ve had 104 deals close versus at this point, last year we’d had 87 close.

Dave, talk about some of the trends that you’ve seen among your sponsor clients.

For sure, I would say that they’re more acquisitive when it comes to their existing portfolio companies. Back in the old days, one of our clients might want to do one or two add-ons over the life of their investment, and now they want to do one or two a year, or in some cases one a quarter, or in certain highly fragmented industries, they might do one a month. So that’s the number one trend. The number two trend is an increasing interest in partnering with talented operating executives as the catalyst for new platform searches, new platform transactions. And so in the last two years, we’ve initiated 12 of those partnerships, which have led to new private equity investments. We are also seeing, as we’ve increasingly worked for some but not all bigger funds, they own bigger portfolio companies. And those bigger portfolio companies oftentimes have international acquisition ambitions. And so we’re seeing that European transactions are an increasing area of interest for private equity. And so we have a team in Europe now, and we see a lot of activity and traction over there as well.

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