Deal of the Year, Small Market, 2016: Riverside


  • Company: Eemax
  • Lender: Webster Bank
  • Legal Advisor: Jones Day
  • Financial Advisor: Keybanc Capital Markets


  • Grew EBITDA from less than $2 mln to more than $9 mln
  • Tripled annual revenue
  • Moved company to a new, larger manufacturing facility
  • Under Riverside, 75 pct of Eemax products were designed or redesigned

Eemax was just starting to warm up when The Riverside Company bought it in 2008. Today the tankless water heater company is boiling hot.

Under Riverside’s ownership, Eemax’s EBITDA grew from less than $2 million to more than $9 million and the company’s revenue tripled. The add-on acquisition of EcoSmart in 2013 expanded its reach into the market for residential heaters, and its products can now be found at in-store and online retailers like Lowes, Home Depot and Amazon.

Riverside’s makeover made Eemax an attractive acquisition target for Rheem Manufacturing Co, which bought the company for an undisclosed price in December.

Tankless water heaters utilize energy only when someone turns on the tap. Conventional storage heaters keep large tanks of water warm throughout the day, which uses considerably more energy. Switching from a conventional storage heater to a tankless heater can cut energy costs by as much as half, according to the U.S. Department of Energy.

Back in 2008, most of Eemax’s revenue came from its products for commercial properties like stadiums and office buildings, just one segment of a large market. Furthermore, the company’s primary distribution network for its products was plumbing wholesalers. While that network included “the Who’s Who of plumbing wholesalers,” Eemax’s footprint was relatively small, said Joe Manning, a Riverside principal who led the Eemax deal along with Finance Director David Kralic and Operating Partner Mike Eblin.

“At that point, they didn’t really have a full management team, and no product development team, and just one engineer,” Manning said. “It was in a growing niche, and it was a little leader in the niche.”

Riverside started by hiring a new management team to guide the business through its expansion. Kevin Ruppelt joined Eemax as president and chief executive officer after a long career with GE. The firm also hired Chief Financial Officer Dave Brault, Vice President of Operations and Engineering Jeff Hankins and Vice President of Sales Rich Corcoran.

The management team subsequently hired several engineers to develop new products for the industrial sector, including heaters for eyewash stations and drench showers. Eemax also developed a “tankless booster” that could be retrofitted to traditional tank-based heaters to comply with new energy efficiency regulations.

Approximately three-quarters of Eemax’s current products were designed or redesigned during Riverside’s ownership of the business.

“We had a good management team. We wouldn’t have been able to do this if we hadn’t made that investment up front,” Manning said.

As Eemax’s product line expanded, so did its manufacturing capacity. In 2013, Riverside oversaw the relocation of the company to a new facility that was 2.5 times the size of its original headquarters. That same year, Eemax also acquired EcoSmart, a Miami, Florida-based manufacturer of residential tankless heaters.

The EcoSmart acquisition provided an entree into the residential tankless heater market. Just as importantly, EcoSmart had a contract with a manufacturer in China. Brian Bunker, who works in Riverside’s Hong Kong office, conducted due diligence on the manufacturer to ensure the operation was high quality and scalable.

“That really enabled us to do an add-on acquisition that, for other private equity firms, might have been too risky to do,” Manning said. “Our team in Hong Kong helped the contract manufacturer optimize its supply chain.”

And Eemax would need to scale if it wanted to meet the demand for its products. During the last year of Riverside’s ownership, the company secured a contract to sell Eemax heaters in Lowes locations across 30 states. Similarly, its sales at Home Depot expanded from locations in just one state to 20 states.

When Riverside hired KeyBanc Capital Markets to manage the company’s sale in 2015, Eemax was practically a new business. The commercial business that once relied on plumbing wholesalers to distribute its products was now a fixture at retailers. Its products serve customers ranging from single-family homes to heavy industrial facilities.

“We had exceeded our objectives, [they’re now] very well positioned for long-term growth,” Manning said.

Photos courtesy of The Riverside Company