Riverside Sells Portfolio Company
Posted by Carl Doerksen on Wed, Jan 13, 2010 @ 09:18 AM
Last week, Pitchbook News announced that The Riverside Company had completed its sale of ATI Career Training Centers. The buyers are the British private equity firm BC Partners. Pitchbook announced that the deal was valued at approximately $500 million.
Under Riverside's ownership, ATI expanded from 8 campuses to 23, added an online division and grew its student body from 2,300 to 15,500. It also sustained annual growth of over 30% for both revenues and EBITDA. ATI was a Riverside Capital Appreciation Fund 2003 investment.
We point this announced transaction out for several reasons. First, it once again indicates that one of the hottest sectors for M&A activity right now is the training, development, and education space. We have discussed this topic in numerous postings over the past several months. Simply put, if you are the owner of a middle-market training, career development, or education company, you need to contact an M&A advisory firm soon. You could be operating a very valuable asset right now.
Secondly, the buyer is a European PEG (private equity group). As we have said, 2010 should see a revival of interest in U.S. based companies by off-shore buyers. This is simply one example of this occurring. And this is great news to owners of middle-market companies. Increased off-shore buyer interest, coupled with U.S. strategics sitting on cash and equity groups having an estimated $400 billion dollars in dry powder, will only help to drive valuations up in general this year.
Finally, this deal is notable given the significant investment that Riverside made in ATI over the past several years. Growing from 8 campuses to 23 took a significant investment on the part of Riverside. And this type of ongoing capital infusion into a holding is not rare. Ultimately, this is how most middle-market equity groups operate. They buy middle-market companies like yours to grow them, expand their market share, and then sell them. In most cases, the original owners of most companies that are acquired by equity groups retain a significant ownership stake after the acquisition. This means that when the equity group eventually sells the company, after making significant investment in its growth, the original owners have a second liquidity event at an even higher valuation.
We point this out since most middle-market owners don't realize how equity groups operate and what they can provide you in terms of growth capital and secondary liquidity events. Now we are not saying that every middle-market company is a potential PEG target. Equity groups are very specific in what they are looking for both in terms of size an industry focus. However, the only way to really find out if your company would be attractive to a PEG is to retain the services of a reputable, professional, experienced M&A advisory firm. An intermediary like The March Group can help you to determine what your company is worth in today's market, help position you to make it more attractive, and ultimately find premium buyers like Riverside. Please contact us today if you are interested in finding out more information about how we can help you do this.