Acquired: 2016
Exited: 2021
Status: Realized
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Premium Branded Air Conditioning Manufacturer

Friedrich is a manufacturer of premium, branded air conditioning products for residential and commercial applications. Friedrich’s products span a broad range of applications and are feature-rich with an appealing aesthetic. The company is based in San Antonio, Texas with manufacturing operations in Monterrey, Mexico and distribution centers in Texas and New Jersey.

Monomoy
Spotlight

The Deal

Monomoy initially reviewed Friedrich in 2011, conducted extensive due diligence and passed on the opportunity. Monomoy’s proactive business development efforts allowed us to revisit the opportunity when the 2011 buyer brought the company back to market in 2016. Our prior review of the business and previous HVAC investment differentiated us in the 2016 process and gave the sellers confidence in our ability to close.

The Investment Thesis

Friedrich presented the opportunity to buy a premium branded air conditioning manufacturer with a large installed base, exposure to growing end markets, an engineering infrastructure that would allow for further product

innovation and a value creation plan centered around foundational investments, better working capital management and a program to grow revenue, EBITDA and margins.

MONOMOYS FOUR KEY QUESTIONS

01
Does the business have a reason to exist?
02
Does the business have problems we can understand and fix?
03
Can the business grow in the future?
04
Can we generate an acceptable return?

Monomoy Operating Team at Work

Monomoy’s Operating Team implemented a wide-ranging Value Creation Plan to professionalize Friedrich’s core businesses processes, increase its profitability, and implement a strategic growth program that would reset the company’s commercial outlook.

We began the transformation of Friedrich by upgrading and professionalizing the Company’s IT and ERP systems, financial reporting and talent. All of these investments would enable the company to make forward-looking, data-driven decisions around demand planning, pricing and costing. While professionalizing the business, we also generated incremental cash by consolidating vendors, negotiating better vendor payment terms and inventory consignment programs and improving collections with customers. We then turned to initiatives meant to accelerate growth and diversify the business. We made investments in new products and product enhancements that would allow Friedrich to expand more quickly outside of retail and its legacy products and further into its commercial markets with its newer products.

Optimizing the Path Forward

H1, 2016
Our prior review of the business and previous HVAC investment differentiated us in the 2016 process and gave the sellers confidence in our ability to close.
H2, 2020
The company demonstrated consistent growth across a range of unpredictable market conditions, including tariffs and Covid-19; increased its customer, channel and product diversity; expanded its margins; and greatly improved its cash conversion cycle.
H2, 2021
In 2021, we completed the sale of Friedrich to Rheem, a global manufacturer of HVAC equipment, water heaters, boilers and commercial refrigeration solutions.