Riverside Goes Very Small With AIA –

As part of its newly launched micro investment campaign, Riverside Co. purchased a new platform company for the small sum of $11.3 million. Riverside completed its purchase of Adventures in Advertising Inc. (AIA), a franchisor of promotional products distributors, from U.K.-based 4Imprint Group, PLC, marking the first of hopefully many miniature deals for the private equity firm.

AIA’s 2004 operating profits totaled a mere $1.8 million, but professionals at Riverside found the company to be a compelling one and Riverside hopes to complete four to five transactions of a similar size on an annual basis.

“We’ve decided to start going further down market because over the last several years we’ve been seeing these deals which were historically deals we chose not to do because they were so small, but they were good, solid companies that could be grown,” Riverside partner Loren Schlachet said. “Today, given the infrastructure that we have and given the nice flow of these small, wonderful companies, we decided that we’ve watched them come and go for too long.”

Riverside’s actively looking across a broad number of sectors for companies that have exhibited strong historical growth, possess real growth potential and boast legitimate competitive advantages.

Riverside’s affinity for the promotional products sector and its predisposition towards the franchise business model attracted the firm to AIA, a franchisor, which provides everything from apparel to pens and mugs to more than 325 franchises nationwide.

Riverside plans to grow the company by increasing its presence within the promotional products sector. “Not only is it a positive underlying industry,” Schlachet said, “but we think there’s a real nice opportunity to find many more companies to affiliate with AIA and therefore increase our royalty strength.”

Riverside plans to hold on to AIA and all of its micro investments for seven to 10 years, Schlachet said.

While there are some institutionally funded buyout shops that complete freestanding micro sized deals, the Riverside Company will primarily be squaring off against unfunded sponsors and platform companies looking to add-on as it peruses the small company market.

The purchase price consisted of equal parts equity and debt. LaSalle Bank provided debt financing and Jones Day counseled the buyers. 4Imprint Group did not use an advisor.