August 10, 2012
Interviewed by: David Snow
Video Clip
Login to view full video

How NAVEX Global and Riverside Partnered For Growth

When the leadership of corporate ethics and compliance platform NAVEX Global sought to expand, it partnered with private equity firm The Riverside Company. This is the story of how NAVEX, led by CEO Mark Reed and President & Chief Strategy Officer Shanti Atkins joined with Riverside Operating Partner Jeff Goodman to pursue a joint vision of leadership in the ethics services and training space.

The group interview includes a discussion of why Riverside liked the ethics space, how NAVEX needed operating support, better financial systems and M&A expertise, the importance of strategic planning with “employees on board” who are made aware that “there is a finish line and you need to have clarity towards that.” (NAVEX is a combination of four companies: ELT, EthicsPoint, Global Compliance and PolicyTech).

When the leadership of corporate ethics and compliance platform NAVEX Global sought to expand, it partnered with private equity firm The Riverside Company. This is the story of how NAVEX, led by CEO Mark Reed and President & Chief Strategy Officer Shanti Atkins joined with Riverside Operating Partner Jeff Goodman to pursue a joint vision of leadership in the ethics services and training space.

The group interview includes a discussion of why Riverside liked the ethics space, how NAVEX needed operating support, better financial systems and M&A expertise, the importance of strategic planning with “employees on board” who are made aware that “there is a finish line and you need to have clarity towards that.” (NAVEX is a combination of four companies: ELT, EthicsPoint, Global Compliance and PolicyTech).

Privcap: What is NAVEX Global? 

Mark Reed, NAVEX Global: Yes, it’s all about improving the workplace. The general market segment we participate in is the ethics and compliance space. So what we do is we work with our clients to establish integrity capital in the workplace.

Privcap: Jeff, what did Riverside like about NAVEX Global in evaluatin whether or not to make an investment?

Jeff Goodman, The Riverside Company: First we liked the space, we like helping corporations be better corporate citizens, and then we wanted to find the right company. With ELT [NAVEX GLOBAL], with Global Compliance and with EthicsPoint, the three companies we put together, we see great assets, great products, and great leadership teams that our feeling was that this industry needed leadership. It had a lot of good smaller providers that were doing an excellent job, but there wasn’t a comprehensive solution. A company large enough with scale to really make a difference and help larger corporations be better corporate citizens and reduce their risk.

Privcap: Shanti, from your perspective why did it make sense to partner with a private equity firm like Riverside to take your company to the next level?

Shanti Atkins, NAVEX Global: Well, first I think the operating support that Riverside provides is something really special about them as a firm. I like to say you can only financially engineer a small company so much. In fact, Riverside does very little of that, if none at all. And the operating support they provide is really what helps a company propel, in terms of its organic growth, and that was something that we really wanted.

The second thing that Riverside brought to the table was the rigor and the discipline of much more formal financial systems, modeling and reporting, so that the company would behave in the way that it wanted to be 5-10 years down the road. Which I think is always how you have to look at operating a business from a financial perspective.

And then, most importantly, we were really committed to doing acquisitions and Riverside knows acquisitions. They know how to do add-ons, they have a phenomenal transacting team. And I knew from the moment I met that team– and we looked at a lot of different private equity firms– that they would be a phenomenal partner. In helping us on only source the right add-on businesses, but integrating them successfully. It’s one thing to buy an add-on, it’s another thing to integrate it successfully and actually have it truly increase the value of the organization.

Reed: They really spent the time to understand our business. So the whole initial introduction period of getting to know each other, wanting to understand our culture and our values, what we were trying to accomplish. And then really inserting the ELT folks, Shanti and her team, into the mix so we could have really a good collaborative discussion about what we are trying to accomplish together. I thought that that was very impressive.

So they really invested the time and energy to get to know us. Made sure that there was a cultural fit, that values aligned. That was very important to us as a management team and as an ownership group.

Privcap: Jeff, Riverside has led NAVEX Global through in-depth strategic planning.  What is the importance of this exercise?

Goodman: Strategic planning– it’s a good process for any company to go through. But particularly when you’re a private equity investor, there is a finish line. And you need to have clarity towards that from day one.

So normally we will very quickly after an investment start a strategic planning process with the company and think about that, think about what is optimal timing. How long do we think we’re going to be partnering together? What is the appropriate exit?

And then starting backwards, go back to the beginning and then say OK, well, what are the steps we need to take between now and then to achieve our goals and achieve our mission? So although strategic planning is always important, from our perspective it’s particularly important when you’re thinking in terms of a finite period of time.

Reed: The other thing I would say to that is that it’s really important to have our employees on board. So we are going to try to be pretty inclusive in how we do strategic planning. I believe strategic planning really has three components.

First, you have your vision– what does success look like, which Jeff alluded to. Secondly, you have your actual strategy. How are you going to execute? What’s the game plan to deliver on that vision? And then finally, if you execute properly what will it produce in the way of financial results? So there has to be an alignment between vision, strategy, and plan, and obviously our employees play a key role in that.

Privcap: What will be a key to driving the success of NAVEX Global in your space?

Atkins: At the end of the day, when you’re in the ethics and compliance space, it’s a credibility sale. You are selling peace of mind and credibility to a very sophisticated buyer that’s either in legal, or HR, or audit. And what we really need to do in terms of differentiating the organization is to pull forward the experience we have, the deep expertise, through what I like to call our combined brain trust of ex-chief compliance officers, ex-general counsels, ex-former prosecutors.

And really almost brand that group and pull them forward. So that clients understand that when we talk about expertise, that’s not an empty word. It’s something that’s informing everything we do, from product design to professional advisory services.

Reed: As we continue to grow and hit our benchmarks, we’re going to earn the right to do additional add-ons. So I would think that we will not only grow organically, but through acquisitions. So I would guess that you would see us continue to add applications that are important to our clients, additional training curriculum, and additional subject matter experts to really partner with our clients, wherever they may have pain.

Register now to watch this video and access all content.

It's FREE!

  • CHOOSE YOUR NEWSLETTERS:
  • I agree to the Privcap terms of use and privacy policy
  • Already a subscriber? Sign In

  • This field is for validation purposes and should be left unchanged.