NEWS RELEASE June 2023
Can Flowserve/Velan Double Their Valve EBITDA with the MPM Aggregated Niche Program?
How Flowserve with Velan can improv EBITDA by pursuing all the most profitable niches.
Flowserve has just acquired Velan creating a valve division with $1 billion in revenues. This makes it the 2nd largest world supplier. Both companies have been technology leaders. The Velan efforts on hydrogen valves for nuclear fusion research and the Flowserve energy recovery products for desalination are examples. Velan has prided itself in its pursuit of niches. The two companies are pursuing thousands of niches each with more than $10 million in annual revenue.
The companies have service centers strategically located around the world. They have R&D activities on multiple continents and have a strong technical image among customers in oil and gas, power, chemicals, refining and other industries. Management is seen as experienced and capable.
This being said, the question has to be why is the latest Velan EBITDA only 6% while the Flowserve EBITDA is 14%. The top valve company had EBITDA of close to 30% as do a few other companies in the flow control space.
The companies with the highest EBITDA have tended to be small and focused on a narrow niche. Their employees thoroughly understand the value proposition and the route to its validation with customers.
Mcilvaine has a program to allow a larger company to emulate the small niche approach. Unfortunately, the time and money is not available to create the expertise over the years taken by the small successful companies. Instead the Internet of Wisdom, which has been leveraged by Mcilvaine for decades, is being utilized to create an aggregation of the most profitable niches.
An extensive analysis has been made of the Velan/Flowserve combination and how the program can double the EBITDA.
One challenge is to create a value proposition and forecast in each of millions of sub niches. Examples are provided for an application and for a product. The application is hydrogen for the chemical industry and forecasts for Mexico are used as an example.
The product is trunnion ball valves for severe service applications where forecasts by valve size are shown.
Relative to obtaining more than 20% market share, the use of the Internet of Wisdom is utilized. An organization of facts and factors is used to create reliable and extensive forecasts detailed enough to be the guide for each salesperson. This includes not only his own activity but the collaboration with others.
A video provides the highlights of this extensive analysis and can be seen at https://youtu.be/Yvp6aQdgynw
The PowerPoint presentation with many detailed examples and facts can be viewed at https://home.mcilvainecompany.com/images/Flowserve-Velan_Most_Profitable_Niches.pdf