Riverside To Score Busiest Fourth Quarter In 22 Years

Everyday it seems like Riverside Co. is announcing another deal.

Today, the PE firm said it had sold GTI Diagnostics to Gen Probe for $53 million. Yesterday, Riverside said it had invested in Sunrise Windows.

Busy seems to be Riverside’ s mantra. The PE firm has so far done eight acquisitions and five exits in fourth quarter, says Graham Hearns, Riverside’s spokesman. This compares to Riverside five acquisitions and one exit in fourth quarter 2009. The buyout shop expects to exit another deal and make three to four more acquisitions before the end of 2010, Hearns says.

So far this year, the PE firm has completed 20 acquisitions and 10 exits. This is up from Riverside’s 15 buys and four exits in all of 2009.

With all this activity, Riverside is on track to record its busiest fourth quarter in its 22 year history, Hearns says. Why so many deals? An expectation gap between buyers and sellers stalled deals for about a year, he says. Sellers didn’t want to accept less than what they would’ve received during good times. “Starting in May, we started to see more realistic expectations between buyers and sellers in the valuation of companies,” he says.

Riverside is actively investing four different funds, including its North American pool, Riverside Capital Appreciation Fund V. The pool raised $1.17 billion in 2009.

Riverside is currently fundraising for its micro cap fund, RMCF II, which has a $250 million target, a person said. The pool is expected to close next year. The buyout shop is also investing its fourth European fund which closed at $420 million earlier this year. Riverside also has an Asia fund that invests in companies with less than $10 million EBITDA.

However, Hearns says that tax issues hasn’t really prompted Riverside to sell or buy companies. “Taxes would be low on the list,” he says.

Riverside, headquartered out of New York and Cleveland, targets the lower middle market. It’s a generalist investor with a focus on healthcare and the education & training sector. The PE firm typically invests $40 million to $60 million equity per deal.