17 Mar 2022

DiversiTech: Greater than the sum of its parts

Permira has been a fantastic partner, bringing both depth of experience and business insight to the management team while always encouraging a high level of investment in our people, products and technology to better serve our customers and strengthen our market leadership.
Andy Bergdoll – CEO of DiversiTech

To be sustainable, rapid growth must be underpinned by a strong corporate infrastructure. When the Permira funds invested in DiversiTech, our priority was ensuring the company had the processes, capacity and culture to consolidate its existing business and continue to expand from a solid foundation.

“We helped DiversiTech catch up to the growth it had already achieved and set them up for years of high growth to come by investing in people, health & safety, processes, systems and manufacturing & distribution assets. In its 50-year history, DiversiTech has never been stronger and better positioned to continue its track of record of market leading growth, unrivalled customer experience and the very best people and we are excited to be able to continue to back the company.” John Coyle – Partner, Permira

Creating a supply chain partner

Our evaluation framework for specialty distribution businesses identified DiversiTech as an attractive business with a strong position in the supply chain for critical heating, ventilation, air conditioning and refrigeration parts and accessories. It had a predictable recurring revenue stream and cross-selling potential.

However, the company’s operating structure had not kept pace with its growth; it faced significant capacity constraints and various prior corporate acquisitions had not been properly integrated. We believed the business could achieve another level of growth that was sustainable and responsible, if first we took the time to invest in its operational infrastructure.

Permira supported the implementation of wide-ranging improvements, such as:

  • Developing a strong executive leadership team and introducing a new CEO;
  • Fostering talent at all levels and functional expertise across logistics, sourcing, operations and IT;
  • Investing significant capital in a new 500,000 square foot distribution center;
  • Investing in manufacturing, systems and software upgrades, including the ERP and CRM, led by new a Chief Digital Officer;
  • Expanding the product range and nearly doubling inventory to 30,000 SKUs;
  • Creating a positive culture centered around “FIRST” - Focus, Integrity, Results, Safety, Teamwork.

Selective M&A

With this solid basis for expansion, DiversiTech was well placed to effectively integrate any future acquisitions, and so it progressed to a disciplined M&A strategy that was designed to reinforce its position in the domestic heating and cooling sector and enable it to expand into adjacent areas.

The business made eight strategic acquisitions, all of which were focused on developing a superior customer proposition.

Prepared for a bright future

In November 2021, five years after acquiring the business, Permira sold DiversiTech to a global private investment firm. Still true believers in the long term growth trajectory of the business, we elected to retain an minority stake and Permira’s John Coyle remains on the company’s board of directors.