Riverside Makes Its Mark on ECN

Although The Riverside Company intended to hold Emergency Communications Network for five years, instead, the firm exited the company via a sale in three years.

The Riverside Company recently sold its ownership position in Emergency Communications Network (ECN) to Veritas Capital for an undisclosed amount. The sale was completed in June, but not before Riverside did a complete overhaul of the emergency notification company—almost doubling its sales revenue and more than doubling its EBITDA.

Riverside bought the Ormond Beach, Fla.-based company in 2011. At the time, the company was a founder-owned business that sent notifications to residents on behalf of government clients like cities, states, and counties. “The system alerted residents about time-sensitive, geographically relevant events that could impact them, such as a missing child or when residents needed to boil their water prior to drinking it,” says Chris Jones, a partner with Riverside. “There are hundreds of reasons why residents might need to be alerted.

“ECN was the clear market leader and at the time we expected there to be more adoption of this technology as people came to expect this type of communication more frequently.”

Riverside saw room for growth, as most of ECN’s competition was from mom-and-pop shops, which ultimately became acquisition targets. Additionally, Riverside realized that ECN’s capabilities could be used in other industries such as healthcare and utilities, broadening the company’s reach. Riverside completed six add-on acquisitions of competitive or attractive companies in industries that ECN had wanted to break in to. All the add-on acquisitions were sourced by Riverside.

Additionally, Riverside professionalized the company, adding a financial reporting system, a board of directors, and a sales budget. The company also moved to new headquarters during Riverside’s tenure. The firm added a few senior people to the company including a head of sales, while keeping the original president and CEO on board. Riverside also brought in two outside directors who had experience with larger technology businesses. They helped ECN develop its sales and marketing program and team.

“The business we sold is a very different business than what we bought,” says Jones. “We were able to make good progress in a short period. We originally planned to hold the company for five years, but achieved our goals in three years so it was time to sell.”

During Riverside’s holding period, ECN’s sales grew by 93 percent while EBITDA grew by 112 percent.

Riverside went into the deal with growth in mind and worked with existing management to reach the goals set forth. “We gave management equity incentives to grow the company, which the prior owners never did,” Jones says. “We agreed on the goals and laid out what needed to be accomplished. We disagreed from time to time, but we all had the same end goal in mind, which helped us be successful. Our approach was the difference between fishing for them and teaching them how to fish.”