When The Riverside Company acquired YourMembership in 2012, it was a single-product company with $6 million of revenue. By the time it came to exit in January 2017, through three add-on acquisitions and organic growth, this had grown by more than 700 percent.
St Petersburg, Florida-headquartered YourMembership provided membership management software to member-based organisations such as associations, non-profits and affinity groups.
Through a series of add-on acquisitions and internal research and development innovation under Riverside’s ownership, the company expanded to four core products: membership management, online career boards, learning management system, and online directories and advertising solutions.
Within 12 months of acquisition, Riverside helped YourMembership complete its first add-on, acquiring a direct competitor, resulting in revenue and customer count more than doubling and the addition of a second product.
The next add-on, JobTarget, made YourMembership the market leader in the online career board segment, as well as achieving revenue synergies through the combination of YourMembership’s career division with JobTarget’s product, team and customer base.
The third, Digital Ignite, had a top online learning product for the association market, but no sales and marketing capabilities. The addition of this business gave YourMembership the opportunity to cross-sell to a large portion of its customer base.
The additional products enabled YourMembership to more than triple its revenue potential per customer, as well as provide a point of differentiation from competitors, which were predominantly single-product companies.
But the transaction was not without its challenges, the biggest of which was integrating the employees and technology from these acquisitions. The first add-on involved combining two founder-led businesses with very different cultures that were head-to-head competitors. The resulting employee departures – more than Riverside had anticipated – proved an important lesson, making the next two add-ons much smoother.
The successful integration of the add-ons involved significant work by the Riverside operating team, as well as employing the Riverside toolkit of outside operating resources.
The extra budget generated through the add-on strategy allowed Riverside to upgrade senior and mid-level management, bringing on an experienced chief product officer to provide a fresh perspective on the product and critical roadmap items that needed improvement. YourMembership also hired a chief revenue officer to build a sales team and sales engine, and replaced the CFO with an executive that could handle a multi-office international business.
Riverside focused the software development and product management teams on building innovative products. This included updating the user interface and making it mobile responsive; integrating programmatic advertising; and allowing customers to create and maintain social networks through the Social Link product.
YourMembership’s sales organisation began cross- and up-selling existing customers the full breadth of the company’s offerings and changed its pricing model. Riverside also helped the company expand its sales strategy to medium and larger-sized customers.
During Riverside’s ownership, YourMembership expanded from a single office in Florida to six globally, including in Europe and Asia, while its international customer base grew from less than 100 to more than 300. Employee numbers grew almost sevenfold from 47 to 312, customer numbers increased from less than 1,000 to more than 4,000, and customer retention increased from 86 percent in 2012 to 95 percent in 2016.
Large-cap: The Carlyle Group – Vogue International
Upper mid-market: Cerberus Capital Management – Bowlmor AMF
Lower mid-market: Francisco Partners – Paymetric
Small-cap: The Riverside Company – YourMembership
Large-cap: Partners Group and Capvis – VAT Group
Upper mid-market: EQT – Faerch Plast
Lower mid-market: Gilde Equity Management – Banketgroep
Small-cap: YFM Equity Partners – GO Outdoors
Upper mid-market: ShawKwei & Partners – YongLe Tape
Lower mid-market: Advantage Partners – Hisense Broadband Multimedia Technologies*
Small-cap: Mekong Capital – Mobile World
*Hisense is not included in the write-ups due to confidentiality issues