Count Dave Harvey as a bull on the economy. The president of the merchant bank Harvey & Company LLC, of Newport Beach, Calif., sees continuing growth rather than a retreat into a double dip.
“Seven or eight out of 10 private equity-backed companies are at least even with last year if not better,” Harvey said. “I think there’s more strength in the economy than you would believe from looking at the stock market.”
While Harvey & Company does some principal investing on its own, mostly in smaller deals—he is launching a $50 million co-investment fund to participate in select transactions—”really what we do is source investment opportunities for private equity firms,” Harvey said, estimating that 70 percent of his business is buy-side research into acquisitions for buyout shops. That is divided roughly equally between platform deals and add-ons, while the remainder, about a third of his business, involves strategic acquisitions for public companies.
Founded in 1998, Harvey & Company has participated in more than 125 transactions, according to its Web site. Harvey said the firm sourced 22 deals that closed last year including 12 platform companies, and the firm is involved currently in seven deals that are under letter of intent.
“That was one of our better runs” in 2010, he said, acknowledging, “We did get a little benefit from the head fake last year on taxes.”
Although the firm is a generalist, Harvey said much of its focus is on industrials, including specialty manufacturing, industrial services, environmental and oil field services along with health care and consumer products companies. The firm has 28 investment professionals.
Harvey & Company maintains a proprietary database with 130,000 companies in it, he said. “We’re first and foremost a market research company.”
He declined to name any buyout firms as clients, but he said there are five firms that Harvey & Company has closed 10 or more buyside transactions with.
Harvey & Company also does executive search for portfolio companies. That service, Harvey CEO, is geared toward executives in transition. Its clients are typically executives who have worked for sponsors in the past and like the business environment.
“This is somebody who wants to be a CEO again as opposed to being an operating partner,” he said. “We think that’s a huge opportunity.”
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