Riverside Partners is building out a managed IT and cybersecurity services platform as it combines Grade A and Convergence Networks, the firm told PE Hub.
As part of the merger, Riverside Partners will invest new equity capital in the platform to accelerate the combined company’s growth trajectory through both organic initiatives and strategic add-on acquisitions.
The new company will focus on helping small-to-medium-sized businesses plan, manage, support, maximize and protect their IT investments, the firm said. The companies are currently serving numerous clients in accounting, insurance, nonprofit, construction and manufacturing.
Members of management from Convergence Networks and Grade A will continue leading the organization and remain significant shareholders in the new entity.
“If you had told me going into a covid lockdown in March of this year would have resulted in a merger and an investment partner before year-end, I would have said you were crazy,” said Eric Gray, CEO of Convergence Networks.
“Funny how things like this happen at the most unexpected times.”
The founders of the pair of companies had known one another for more than 10 years and shared many best practices, David Del Papa, general partner at Riverside, told PE Hub.
“So, even before the actual combination has happened, the businesses had a lot of common platforms, values and culture, which got us excited,” the investor said.
For Riverside, the investment came at a time when the firm had already sought a platform in the space for a few years. According to Del Papa, the managed IT and cybersecurity services space has been showing strong growth, especially amongst small- and mid-sized business clients.
“If you think about some of the technology issues that small- and medium-sized businesses face, those issues are growing: whether it’s new cyber threats, moving to the cloud, thinking of the right sort of backup and storage, the right sort of software program to use,” Del Papa said.
“That list only grows by the day,” he added.
Both Grade A and Convergence serve businesses as a trusted advisor to work through such issues. The companies also present themselves as leaders in their geographies: Grade A in the Ottawa area and Convergence in the Portland area, Del Papa said. Having the two companies based in different time zones also allows for better coverage of the client base, he added.
The company through the pandemic has provided remote monitoring support, proving its value to clients, Del Papa told PE Hub.
Companies transitioning their workforce to an out-of-office environment needed and relied on having that trusted advisor to walk them through setting up Microsoft Teams and putting data in the cloud, he explained.
“Folks like Convergence and Grade A were perfectly set up to help them navigate that difficult time,” Del Papa said.
“In fact, when we spoke to their customers, a lot of them had mentioned that if it weren’t for those two companies, they’re not sure where they would be today,” he said.
The investment is also representative of Riverside’s long-term strategy of backing founder-led businesses. Grade A and Convergence have not taken any institutional capital prior to the merger.