Private equity firm The Riverside Co. recently acquired The Dwyer Group Inc. for the second time. The Dwyer Group, based in Waco, Texas, is a holding company for seven residential and commercial franchise service brands, including Aire Serv, a heating and cooling brand.
Riverside first purchased The Dwyer Group in 2003, electing to privatize the public company. After seven years of growth, the firm sold The Dwyer Group to TZP Group LLC in 2010. The new Riverside purchase transfers majority ownership from TZP back to Riverside, along with a significant reinvestment from The Dwyer Group executive team, and an investment from each brand president within The Dwyer Group companies.
This is the first time Riverside has reacquired one of its previously owned companies, said Sarah Roth, a partner at Riverside’s Dallas office.
“As a private equity owner, we sell our companies,” Roth explained. “We hold onto our companies on average for five years, sometimes as short as three years, and sometimes as long as 10 years. It’s part of the natural life cycle for us in order to generate a return for our investors. No matter how much we love a company, at some point, we have to sell it in order to generate a return.
“We really liked the business and the team the first time we worked with them,” Roth continued. “It’s just a great company — one of the best franchisors that we’ve seen, and we’ve looked at a lot of different franchising businesses over the years. They have a very strong culture, a great base of franchisees, and a great management team whom we got to know very well last time we were partnered together. When they approached us about potentially returning to the partnership, we were immediately intrigued.”
Dina Dwyer-Owens, executive co-chair of The Dwyer Group, said the company stayed in close communication with Riverside. “We believed they would be great to have back as a partner when it came time for TZP to exit their investment,” Dwyer-Owens said. “Not all private equity groups are equal, and we would rather do business with ones we know and trust to bring real value and respect, and nurture our special culture and franchise relationships that we’ve worked years to build.”
The terms of the purchase were not disclosed, but KXXV-TV in Waco, Texas, reported that Dwyer Group associates will share in $1 million as part of the sale. “All of our brand presidents and department heads have an equity stake in the company, which gets everybody rowing in the same direction really hard. That’s a change that happened as a result of the transaction,” said Dwyer-Owens. Roth said the transition should be seamless to brands like Aire Serv, which has “a great team in place. It’s our aim to provide them with additional resources to help them grow and continue improving business.”
Aire Serv franchisees provide installation, maintenance, and repair of HVAC and IAQ systems from 170 locations in the U.S. and Canada.
“I can use history as an indicator of what’s going to happen in the future and how this is going to affect us,” said Doyle James, president, Aire Serv. “One of the things that happened when we went from being a public company to a private company with Riverside the first time is they came in and said, ‘OK, we really want to figure out what we can do to grow the network, grow the brands, increase coverage, and maximize what we have today.’”
Doyle said Aire Serv has had tremendous growth and changes because of the first partnership with Riverside.
“We’re at a point where we’ve reached a new level, and now we have to go to the next level,” he said. “The biggest thing for Aire Serv is we want to continue to help our franchisees grow. We want to find ways to make them better, more profitable, and more successful by removing the complexity from the business. More and more of what we do is going to be focused on how we make what they do easier and better. The reason for that is when you have happy, successful franchisees that are making money, then other people who want to be just like that are attracted to the company and that makes it even easier for us to grow.”
Dwyer-Owens said Riverside will “come in and look at ways they can really add value — like adding additional services and resources for Aire Serv franchisees to help grow their businesses.”
Riverside is completely focused on growing The Dwyer Group, according to Roth. “They have a great group of franchise concepts they work with today. We’ve been talking a lot with the management team about their thoughts on how to continue to drive growth in their existing businesses, whether that’s selling new franchises to new franchisees or helping existing franchisees increase revenues and local customer bases,” she said. “And then we’ve also talked to them about potentially looking to acquire other concepts and to grow through acquisitions.”
And all that growth could mean new employment opportunities. According to Roth, new employment opportunities will be created as new franchises open and when existing franchisees grow.
Dwyer-Owens said Aire Serv has jobs available now. “We don’t have a lack of customers in our service areas — we have a lack of skilled technicians. That is the problem that we’re facing today.”
According to Doyle, Aire Serv has already exceeded all of its 2014 growth targets to date.
“I do know where we are today, and we will be in a much better place in five to 10 years because of the relationship we have with The Riverside Company,” said James.
Publication date: 9/22/2014