Buyers ready with capital and lenders willing to lend made 2014 the year of the exit, and the Riverside Co. leveraged the favorable conditions to complete an impressive tally of 19 portfolio-company sales. The venerable private equity firm racked up some considerable wins, including the largest return since its founding in 1988.
"We realized $2.5 billion in value and were able to distribute $1 billion to our investors, which is great," says co-CEO Stewart Kohl (pictured, right). "It's been a great time to exit, and our decision to exit so many companies was quite conscious. We started preparing for this in 2013."
To pave the way, Riverside visited every one of its portfolio companies to determine which were ready for exit. This practice coupled by numerous eager buyers waiting in the wings led Riverside to exit some companies a little earlier than the firm might have under different circumstances. In December, Riverside sold Baby Jogger Holdings, the maker of the well-known baby stroller aimed at runners, to Newell Rubbermaid (NYSE: NWL), which owns the Graco stroller brand, for about $210 million. Riverside invested in Baby Jogger in 2012.
"Graco came knocking with a great offer. We had achieved most of our goals for the Baby Jogger investment, so the company was in good shape for a sale, and we were delighted to provide a nice return a little earlier than planned," says Kohl.
Also in December 2014, Riverside sold Disa Global Solutions to Court Square Capital Partners, making it one of the largest exits in Riverside’s history. Riverside's four-year hold of Disa transformed the company in every way. When Riverside invested in Disa, it was a tiny Texas company that specialized in drug screening for workers in the oilfields of the Southwest. By the time of the exit, Disa had become a multifaceted international provider of employment screening services. The integration of add-ons and a strategic growth approach led to one of Riverside’s best-ever deals, highlighted by the firm's quadrupling the Ebitda of the business.
Riverside celebrated its 100th exit in May, when it sold the Retail Zoo Pty. Ltd. to Bain Capital for a reported $172 million. Retail Zoo is a quick-service restaurant franchisor based in Australia. Its concepts include Boost Juice Bars, Salsa's Fresh Mex Grill, Cibo Espresso and Hatch Chicken Shop. When Riverside invested in it, Retail Zoo had 240 total stores. When the firm exited, Retail Zoo boasted 390. Riverside also focused Retail Zoo's international operations, shedding unprofitable locations while focusing on growth area, such as adding 50 new international stores opened during the hold. Ebitda increased 96 percent during the hold period.
"We are really proud of what we accomplished in 2014 for our investors," says co-CEO Bela Szigethy. "We expect 2015 to be busy, but we have our work cut out for us to match 2014 in terms of exits."