by Danielle Fugazy
January 27, 2016

How Riverside Got into Hot Water—and Hit it Big

The Riverside Company rode the shift to energy efficiency and a sound operational plan to success with its recent exit.

In 2008, The Riverside Company sought to capitalize on the regulatory and consumer trend toward energy efficiency by investing in Eamax, a Connecticut-based manufacturer of tankless water heaters.

Not only did Eamax’s products produce hot water with less electricity than the traditional standby water tanks in the majority of U.S. homes, but it also had yet to expand beyond its commercial client base. The secular shift toward energy efficiency and the untapped markets proved a winning combination—in December 2015, Riverside exited its Eamax investment with a sale to Atlanta-based Rheem Manufacturing. Terms of the deal were not disclosed.

Joe Manning, The Riverside Company

Riverside grew the company organically, as well as through an acquisition. First, Riverside expanded Eemax’s management, sales, and engineering teams, said Joe Manning, a principal at Riverside. Then the firm moved Eemax into a significantly larger manufacturing facility and committed capital to R&D so the company could develop new applications for its existing product line and, most importantly, expand its product portfolio.

Those new products included a tank to be used in manufacturing plants in case of a chemical spill or fireRegulations require many plants to have warm water available in case of an accident, Manning explains. “It’s really inefficient to have water sitting in a tank getting hot when it may only be used once every two months. Eemax is able to produce hot water on demand.”

The second piece of the company’s growth came from an add-on acquisition. In 2013, Eemax purchased Miami-based EcoSmart, which already had a residential electric tankless product and strong customer relationships. “The acquisition allowed Eemax to expand its sales channel because EcoSmart was selling through big box retails like Home Depot, Ace Hardware, and online through Amazon,” says Manning.

Additionally, the acquisition grew Eemax globally, both through acccess to EcoSmart’s Chinese manufacturing base and the company’s distribution channels and expertise in Latin America countries including Ecuador and Costa Rica.

When Riverside decided to sell Eemax, the company was a market leader in the commercial, residential, and industrial space for electric tankless water heaters. The sale was completed in December 2015 after seven years of ownership. “We were No. 1 in three markets,” Manning says “We had tripled revenue and quintupled EBITDA in seven years and we felt it was time to bring on the next buyers.”

A principal with The Riverside Company explains how the firm improved tankless water heater manufacturer Eemax leading up to an exit.

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