Private Equity Perspective
Riverside's Bet On ECN Paid Off During Hurricane Sandy
The private equity firm bought the emergency-notification system provider a year before Hurricane Sandy hit landfall
The Riverside Co.'s acquisition of Emergency Communications Network Inc. (ECN) in October 2011, one year before Hurricane Sandy hit landfall, proved particularly prescient. The private equity firm, with headquarters in New York and Cleveland, used ECN's system to communicate with New York employees when the firm's primary data center had to be turned off Oct. 29, due to flooding of Manhattan's financial district.
Riverside rents space for its primary data center at 33 Whitehall St. at the southern tip of Manhattan. It's a building famous for housing the data centers of many of the country's biggest Internet service providers, such as Cogent Communications Group Inc. (Nasdaq: CCOI).
"The building experienced an unprecedented amount of salt water in the basement, and for the first time, they had to manually over-ride the generators," reports Eric Feldman, Riverside's director of information technology (IT). "We went into disaster recovery mode and sent over the majority of our systems to our Cleveland data center."
Between ECN's services and Riverside's second data center, the company was able to maintain its IT systems, including email, "fairly seamlessly," says Feldman.
When asked if companies that provide disaster prevention and recovery services, such as ECN, are likely to become more desirable acquisition targets for private equity firms in the wake of Hurricane Sandy, Riverside chief operating officer Pam Hendrickson responds: "In every rain cloud, there's always opportunity. This is a good moment for ECN to show how good they are."
Hendrickson cautions, however, that now is not an optimal time for private equity companies to make new acquisitions in disaster prevention and recovery. "A company that, say, supplies emergency generators would show an aberrant pop in revenue right now, which is a general jinx for PE firms."
When asked if Riverside might invest in more companies in the disaster business, Hendrickson replies, "We like communication in these events, to tell people what's going on and how they should respond in an emergency. We would also probably like first-responder healthcare training."
But investment strategies aren't top of mind for Hendrickson in the wake of the storm. "We just aren't thinking about that now," she says. "We really are only focused at this moment on the health and safety of Riversiders and our portfolio company employees."
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