We look back with great satisfaction at hundreds of successful investments, and look forward to greater innovation and growth in the future. Béla Szigethy Riverside Co-CEOpartnership . growth . integrity
Review&Reflect 2011 At A Glance 2 Case: TRANSPOREON 3 2011 Acquisitions 4 SPECIALISATIONS 7 THE RIVERSIDE DIFFERENCE 8 2011 Exits 10 CASE: PHYSICIANS PHARMACY ALLIANCE 13 Contents Fund HIGHLIGHTS 14 Contact Us 16 www.riversideeurope.com
2011 AT AGLANCE 29 7 ACQUISITIONS NEW LONDON EXITS OFFICE Riverside has proudly done things differently since 1988. Its uniqued2.5BN approach to buying and building companies, coupled with a diverse and talented international team, has delivered ASSETS UNDER superior outcomes for over two decades. MANAGEMENT Riverside has evolved since its founding, but the things that define the firm remain 80 consistent – its principled approach, its dedication to small deals on a global scale, and its ability to deliver consistently superior returns. CURRENT Riverside looks back on an outstanding 2011, which saw the firm excel in a PORTFOLIO challenging environment.16,000+ d414 MMPORTFOLIO INVESTEDEMPLOYEES d227MM NET RETURNEDAll data as of 31 December 2011 unless otherwise stated.Past performance is not necessarily indicative of future results. 2 3
Accelerating TRANSPOREON Group uses its Internet logistics platform to link industrial and tradingEfficiency companies with their carriers, saving clients considerable time and money. Its software- as-a-service (SaaS) optimises transport logistic processes and communication between industrial companies, trading companies, carriers, drivers and consignees, finding the best delivery method while reducing shipping time and expense. As the market leader in Europe, TRANSPOREON links more than 450 shippers to 22,000 carriers, and its customer service team supports 60,000 users from 70 countries using the platform in 17 different languages. Riverside invested in TRANSPOREON in August 2011 in order to enter into the attractive2 0 1 1 A c q uisition European transport industry through an innovative market leader. Riverside plans to grow TRANSPOREON by adding new markets and helping the company continue to automate and professionalise the relationship between shippers and logistics-service providers. The company has already begun market expansion with pilot operations in the U.S. and China. New initiatives, new products and new markets are all on the horizon for TRANSPOREON.
2011Acquisitions “The Riverside team delivered in terms of exciting new investments. Antonio Cabral We enter 2012 with a Riverside Fund Manager strong pipeline of deals and great conviction around our unique model.”PLATFORMS ADD-ONSPhysicians Pharmacy Avatar International Mitco Hospice CareAlliance Acquired: September [DuBois Chemicals] of SouthwestAcquired: January Location: United States Acquired: March [American Hospice]Location: United States Location: United States Acquired: August Centiv Services Location: United StatesCamelot Education Acquired: September Ostomy CenterAcquired: January Location: United States [ActivStyle] Next Health [MLCOA]Location: United States Acquired: April Acquired: November Power Planning Location: United States Location: AustraliaRameder System (PPS)Acquired: January Acquired: October Alliance1 [Express] HR Solutions [Avatar]Location: Germany Location: Sweden Acquired: May Acquired: December Location: United States Location: United StatesPareto KEYMILE Acquired: March Acquired: October Home Wellness Newvision [Tensator]Location: Canada Location: Germany [ActivStyle] Acquired: December Acquired: June Location: PortugalBio San Laboratories Emergency Location: United StatesAcquired: April Communications TradeOne MarketingLocation: United States Network, (ECN) Insurance Claims [Centiv Services] Acquired: October Cooperative [Global Acquired: DecemberReima Location: United States Claims Services] Location: United StatesAcquired: July Acquired: JuneLocation: Finland HRA Pharma Location: Canada Global Compliance Acquired: November Services [ELT]Sunless Location: France Blue Sky Factory Acquired: DecemberAcquired: July [WhatCounts] Location: United StatesLocation: United States CPA Site Solutions Acquired: July Acquired: November Location: United States Wiz Ilsan [Wiz Korea]Transporeon Location: United States Acquired: DecemberAcquired: August Action Automation Location: South KoreaLocation: Germany [iAutomation] Acquired: July Location: United States Acquisitions shown reflect acquisitions across all Riverside funds. Not all investors will participate in all such investments. 4 5 References to the portfolio companies of the Funds should not be considered a recommendation or solicitation for the portfolio company mentioned, nor should individual portfolio company performance be considered representative of all portfolio companies held by the Funds.
Acquisition Highlights Acquired: January Location: Germany Rameder offers tow bars, roof racks, bicycle racks, ski boxes and other carrying accessories for almost any make and model car sold in Europe. Complementing its headquarters in Germany, Rameder has operations in Austria and Poland, giving the firm a strong CEE foothold. The company’s well-established market position is due to a unique combination of excellent products, robust online sales, sophisticated logistics processes and exceptional customer service. www.kupplung.de Acquired: September Location: United States Avatar provides patient-satisfaction surveys mandated by the Centers for Medicare & Medicaid Services in addition to customised surveys focusing on the patient’s healthcare experience, actionable data reports, benchmarking, and best practices guidance. Avatar serves more than 350 hospitals, 14,000 physicians and 120 home health agencies. www.avatar-intl.com
Acquisition Highlights Acquired: July Location: Finland Reima is a leading brand of high-quality children’s outdoor clothing, with a strong market position in the Nordics and Russia. The core focus of Reima is developing high- quality, functional clothing - allowing kids the freedom to do what they please outside and remain protected from the elements all year round. The company sells its clothes under three main brands: Reima, Lassie and Tutta. www.reima.com Acquired: September Location: United States Centiv offers a comprehensive marketing automation platform that provides tools to develop customised, local marketing campaigns that can be designed, produced and fulfilled quickly. Centiv combines front- end marketing resource management software with digital print production capabilities to support campaigns from conception through execution and fulfilment. www.centiv.com6 7
Industry Specialisations Riverside’s specialisations played a role in most of its 2011 acquisitions, accounting for 18 of the 29 deals it completed. While there are no plans to abandon its generalist approach, over the past several years, Riverside has deepened its expertise in several key industries; Healthcare, Education & Training, Software and Franchising. Future planned specialisations for the firm include clean technology and consumer products, two rapidly growing segments in which Riverside already has considerable experience and dedicated staff. Riverside has seen faster growth and greater returns on exits from investments developed by specialist teams. Riverside is among the most These four specialities have active and experienced realised a powerful 3.4x net healthcare and education cash-on-cash return from 14 investors in the world, exits that yielded €468 million. completing 83 such deals in the firm’s history - 12 in the last 12 months alone!Data accurate as of 31 December 2011. Past performance is not necessarily indicative of future results.Performance of these specialties is not typical. See Page 10 for additional information.
“No firm in the world shares Riverside’s resources and approach. Even as we’ve become larger and more sophisticated, we’ve remained commited Stewart Kohl Riverside Co-CEO to accelerating growth for small successful companies” Riverside is the only global private equity firm focused exclusively on the smaller end of the middle market. Through its 200+ employees on the ground in 20 international offices, Riverside has the connections to grow small businesses across its footprint.8 9
THERIVERSIDEDIFFERENCEOrigination ANYWHERE Operating MuscleRiverside works on the ground everywhere the firm invests, With more than 25 senior executives serving in full-timescouring the globe for opportunities. Riverside pioneered the operating roles, Riverside has always been a leadinguse of dedicated sourcing professionals, and while this global proponent of creating lasting value organically. Anapproach has since been imitated, few firms in Riverside’s operating team was once seen as a resource for fixingmarket can equal its experience and results. problems at companies. Today, it’s recognised as a force for innovation, creating value and growing companies.Adding Value Principled ApproachRiverside dedicates its expertise, resources and experience Riverside has always embraced investors’ interest into making its companies bigger and better by sourcing environmental, social and corporate governance (ESG+V)new customers, suppliers or other opportunities. For specific issues. At Riverside, we’ve ‘added a ‘V’ for values to representchallenges, the firm uses its Riverside Toolkit, a large pool a values-based philosophy of doing business. Riverside hasof vetted resources that help optimise companies through long considered sustainability, environmental impact, andlean manufacturing, pricing, sales and marketing, and company leadership as a natural part of its due diligenceother areas of expertise. and day-to-day operations.SUPERIOR SUPPORT Continuous ImprovementRiverside supports all of its activity with a coordinated Riverside University is an ongoing series of professionalmultifaceted team that shares the same goals as the firm’s development and education programs open to allinvestment professionals. These professionals monitor portfolio Riversiders and portfolio company management teams.performance, develop cost-saving programs, promote This program culminates in a two-day annual leadershipRiverside globally, and support the development of investment summit, which brings together Riverside employees, portfolioprofessionals and portfolio company management. company CEOs and CFOs, and outside board members.INTERNATIONAL GROWTH Industry VOICEWhether it’s evaluating investment opportunities or opening Riverside takes great pride in its positive approach tonew markets, Riverside helps its entire portfolio globalise private equity. As the industry has come under increasedthroughout every market in which it operates. In addition, scrutiny, Riverside has stepped up its advocacy role,Riverside’s dedicated Asian sourcing program helps highlighting the benefits of private equity to the publiccompanies access growth opportunities across Asia. and policymakers through direct interaction with elected officials, speeches and articles, and participation with trade organisations.
2011 Year in review 2011 Exits “The volume of Riverside’s exits show how active we are Pam Hendrickson around the world. The quality Riverside COO of those exits demonstrates our commitment to sustainable growth.” Sentinel Acquired: August 2005 Exited: February 3.1x gross cash-on-cash return 22% gross IRR Justrite Manufacturing Acquired: December 2004 NET Exited: June 3.5x gross cash-on-cash return 20% gross IRR Momentum Acquired: August 2006 Exited: August 4.9x gross cash-on-cash return 35% gross IRR COMBINED IRR EM Test NET Acquired: March 2008 Exited: October 3.5x gross cash-on-cash return 39% gross IRR Results Weight Loss Acquired: August 2008 Exited: November 0.0x gross cash-on-cash return -100% gross IRR COMBINED CASH-ON-CASH RETURN Media Source Acquired: April 2007 Exited: November 2.8x gross cash-on-cash return 25% gross IRR Crisis Prevention Institute Acquired: September 2006 Exited: November 5.0x gross cash-on-cash return 36% gross IRR Unless otherwise indicated, (i) any references to “gross IRR,” are to the aggregate, annual, compound, gross internal rate of return on investments and (ii) any references to “multiple of investment,” “MoC” or “multiple of cost” are to gross multiples of invested capital. Unless otherwise indicated, any references to “net IRR to LPs,” “net multiple of cost,” “net multiple of investment,” “net MoC” or “net DPI” are to the internal rate of return or multiple of invested capital calculated or net distribution per invested capital at the relevant Fund level, after payment of applicable management fees and carried 10 11 interest and other applicable expenses. An individual limited partner’s net IRR may vary based on the timing of capital contributions and distributions. Past performance is not necessarily indicative of future results.
ExitHighlights CPI is the world’s leading training organisation specialising in the safe management of disruptive and assaultive behaviour. Acquired: September 2006 5.0x gross cash-on-cash return 36% gross IRR The 2009 add-on acquisition of Dementia Care Specialists expanded CPI’s focus to include seniors suffering with dementia and their caregivers, while the 2010 addition of Positive Options solidified CPI’s market leadership position in the UK market and internationally. The company conducts more than 300 training programs each year in 39 different countries and 130 cities around the world. EM Test manufactures electromagnetic compatibility (“EMC”) test and measurement instrumentation for the automotive, industrial, telecom and other industries. Acquired: March 2008 3.5x gross cash-on-cash return 39% gross IRR Riverside’s original investment plan called for expanding and deepening EM Test’s footprint and products. However, confronted with the global economic crisis, EM Test adjusted its output. With the key drivers for demand in EM Test’s products intact, the company was poised for growth after the downturn and further strengthened its position as the leading supplier in its space. The 2009 add-on acquisition of Lüthi Elektronik Feinmechanik AG allowed EM Test to integrate a leading producer of measuring clamps for EMC test equipment.
ExitHighlights Momentum distributes fabric to commercial furniture manufacturers as well as architectural and design firms that serve the office, hospitality, education and healthcare markets. Acquired: August 2006 4.9x gross cash-on-cash return 35% gross IRR Combined with the strong management team, Riverside helped Momentum to prosper and grow organically during the Global Financial Crisis. The company more than doubled its EBITDA and increased sales during Riverside’s hold period through controlling expenses, the implementation of competitive pricing strategies, an investment in initiatives, and innovative product development. Sentinel manufactures products used to clean and protect residential central heating systems. Acquired: August 2005 3.1x gross cash-on-cash return 22% gross IRR Riverside invested in Sentinel as a corporate carve-out from General Electric. Riverside transformed Sentinel from a small corporate division to a standalone company with operations and personnel spread across six countries. During Riverside’s ownership, Sentinel added a range of products and customers with the 2007 add-on acquisition of Salamander Engineering Ltd., a smaller UK-based competitor. The investment was truly international for the global firm, as it involved two Riverside funds – the North America-based Riverside Capital Appreciation Fund and the Riverside Europe Fund. Having deal team members on both sides of the Atlantic delivered a broad range of insight and experience to the company.12 13 Past performance is not necessarily indicative of future results. See Page 10 for additional information.
Improving Outcomes, Lowering2 0 1 1 A c q uisition Costs Healthcare costs continue to spiral upward internationally, and nowhere is that more true than the U.S. Riverside sees tremendous potential in companies that help reduce costs while improving patient outcomes. Physicians Pharmacy Alliance (PPA) is an ideal example. The company, based in North Carolina, provides high-touch medication dispensing services for patients who require extra attention due to their use of multiple, high- cost, or specialty drugs. PPA works in concert with providers and patients, helping ensure the safety of the chronically ill patients they serve while reducing costs due to incorrect dosages, drug interactions, and other medication- interaction problems. The home-delivery method also helps ensure that patients are safely maintaining their prescription regimen. Using its healthcare specialisation to evaluate the opportunity, Riverside invested in PPA in January 2011, and anticipates expanding the company geographically, through added services, and potentially via add-on acquisitions.
2011 Fund Highlights In the face of macroeconomic uncertainty, Riverside remained steadfast, with its funds outperforming competitors and major market indices and its portfolio increasing valuations in eight out of ten active funds. Highlights included: • losing RMCF II at $137 million, 37% above target. It is the first time Riverside has partnered with the U.S. government’s C Small Business Administration (SBA) as a Small Business Investment Company (SBIC) fund. This gives RMCF II access to incredibly low-interest rate debt from the SBA, and adds up to $150 million in capital, providing RMCF II with a total of $287 million to invest. The fund is off to a running start, purchasing five companies and performing very well. • Maintaing top-quartile performance in seven out of nine mature funds. • NET €227 million returned to investors.Through four fund families, Riverside invests in healthy growing companies valuedup to $200/€200 million in North America, Europe and the Asia-Pacific region. Riverside Capital Appreciation Fund Riverside Asia-Pacific Fund (RAF) (RCAF) Founded in 2007, this fund family targets the Founded in 1988, this fund family invests developed economies of the Asia-Pacific in North American-based companies with region, focusing on companies with EBITDA EBITDA of $5 million to $20 million. of $4 million to $15 million. Riverside Europe Fund Riverside Micro-Cap Fund (REF) (RMCF) Founded in 1997, this fund family invests in Founded in 2005, this fund family seeks fast- leading companies in Europe with EBITDA growing North American “micro” companies between €3 million and €20 million. with up to $5 million in EBITDA. Past performance is not necessarily indicative of future results.14 15 References to the SP 500 Index or other indices are made for comparison purposes only and an investment in a private equity fund (e.g., the Funds) is unlike an investment in an index of liquid public equity securities. “Top quartile” performance is based on Cambridge Associates net cash-on-cash return benchmark and Riverside returns as of September 30, 2011.
LIFETIMEEXITS 68 47% 2.9x NET NET EXITS Combined IRR Combined Cash-on-cash returnNet Realisations 29 EXITS 10 EXITS 13 EXITS 12 EXITS 4 EXITS 1x 1x - 2.5x 2.5x - 5x 5x - 10x 10x COC 20 YEAR RETURNRETURN COMPARISON 20% 10 YEAR RETURN 5 YEAR RETURN 3 YEAR RETURN 15% 15% 15%10% 10% 10% 10% 5% 5% 5% 5% 0-5% 0 0 0 CAMBRIDGE ASSOCIATES CAMBRIDGE ASSOCIATES LLC GLOBAL RIVERSIDE NET RETURNS LLC U.S. PRIVATE EQUITY® (EX-U.S.) PRIVATE EQUITY INDEX SP 500 MSCI WORLD EX U.S. INDEXSource: Cambridge Associates; MSCI; Riverside. Information as of 30/06/2011Past performance is not necessarily indicative of future results. See Page 10 for additional information.All data as of 31 December 2011 unless otherwise stated.
CONTACT USNorth AmericaAtlanta Luxembourg, Luxembourg2746 Dover Road 46A, Avenue J.F. KennedyAtlanta, GA 30327 L-1855 LuxembourgUnited States LuxembourgT: +1 770 948 4256 T:+ 352 271729 1Chicago Madrid, Spain4545 N. Hermitage Avenue Serrano 120-3°dchaChicago, IL 60640 28006, MadridUnited States EspañaT: +1 773 334 7518 T:+34 91 590 1337 200Cleveland Munich, Germany +Terminal Tower Alter Hof 550 Public Square, 29th Floor 80331 MünchenCleveland, OH 44113 DeutschlandUnited States T:+49 89 242 248 90T: +1 216 344 1040 Prague, Czech RepublicDallas Václavské náměstí 832/193131 McKinney Avenue 110 00 Praha 1Suite 160 Česká RepublikaDallas, TX 75204 T:+420 224 890 166United StatesT: +1 214 871 9640 Stockholm, Sweden EMPLOYEES 20 Blasieholmsgatan 4ALos Angeles 114 48 Stockholm1453 3rd Street Promenade SverigeSuite 305 T: +46 8 545 0 3030Santa Monica, CA 90401 Warsaw, PolandUnited States ul. Zielna 37/cT: +310 499 5080 00-108 WarszawaNew York Polska45 Rockefeller Centre, T:+48 22 320 4820630 Fifth Avenue, Suite 2400 Asia PacificNew York, NY 10111United States Hong Kong, China OFFICES 14T: +1 212 265 6575 Times Square Room 2912 Shell TowerSan Francisco 1 Matheson Street455 Market Street Causeway Bay, Hong KongSuite 1520 ChinaSan Francisco, CA 94105 T: +85 2 2159 7492United StatesT: +1 415 348 9560 Seoul, South Korea 21FL, Seoul Finance CenterEurope Taepyeongro 1-ga, Jung-guBrussels, Belgium 100-768 Seoul7. Avenue Lloyd George South KoreaB-1000 Brussels T: +82 2 3782 6820 COUNTRIES 4Belgium Tokyo, JapanT: +322 626 21 21 Level 9, KamiyachoBudapest, Hungary Prime PlaceMillenáris Avantgarde 4-1-17, Toranomon,Fény u. 16. Minato-kuH-1024 Budapest Tokyo 105-0001Hungary JapanT: +361 224 9050 T: +81 3 5408 1230London, United Kingdom Melbourne, AustraliaCity Point Level 35, 140 William Street1 Ropemaker Street Melbourne, VIC 3000 CONTINENTSLondon, EC2Y 9HT AustraliaT: +44 208 895 4876 T: +61 3 8672 2000The Information contained herein speaks as of the date hereof or as of the specific date(s) noted herein, as applicable. The Informationcontained herein is not intended to be relied upon as investment advice and is not, and should not be assumed to be, complete.
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The Riverside Company 2012. The information contained herein(“Information”) is furnished on a confidential basis for the sole andexclusive purpose of allowing a recipient to evaluate its investment inthe limited partnership interests or redeemable participating shares,as applicable, of private funds (“Funds”) offered by Riverside Partners(“Riverside” and its affiliates), L.L.C. d/b/a The Riverside Company(“Riverside”). As a condition to being given access to the Information,each recipient thereof agrees not to transmit, reproduce or makeavailable to anyone any of the Information or to use it for anypurpose other than the evaluation of such recipient’s investmentFunds. Each person who has accessed, or received a copy of, theInformation (or any part thereof) is deemed to have agreed (i) not toreproduce or distribute the Information, in whole or in part, except toany employee, agent or representative directly concerned with therecipient’s investment in the Funds who agrees to be bound by thisparagraph, (ii) to return the Information to the Funds promptly uponrequest and (iii) to be responsible for any disclosure of the Information,by such person or any of its employees, agents or representatives.