Ian Blasco on Private Equity at Riverside Partners
Ian Blasco
Ian Blasco graduated from Princeton University in 1995 Summa Cum Laude before joining Bain and Company from 1996-1998. Blasco springboarded from Bain and Company to Bain Capital in 1998 and remained at the firm until 2008. During his time at Bain Capital, he obtained his MBA from Harvard Business School. Following his career at Bain Capital, Blasco became one of five general partners at Riverside Partners between 2010-2018, where he was involved in key investments including Welocalize, Eliassen, Firstlight Fiber, Pilgrim Software, and ITC Communications.
Amy Wang (BT): Since graduating from Princeton, you’ve had a long career in consulting and private equity. Can you detail what drew you to these industries? What led you to Riverside Partners?
Ian Blasco (IB): It was a different time period. My sense is that students nowadays are much more aware of consulting and private equity than they were back in the 90s. I actually first connected with Bain and Company, my first employer, fall of my senior year in college. While I was at Bain, they started a new practice consulting to private equity firms, and I joined and spent a year advising private equity firms on potential acquisitions. That got me interested in private equity and I ended up applying to Bain Capital and that launched me down my career path. I’ve now been in private equity for 21 years.
I had been at Bain Capital for ten years, and they had grown tremendously while I was there. For context, when I joined Bain Capital had about 70 employees in a single office in Boston. It was investing out of a 600 million dollar fund. And by the time I left, it had over 600 employees and close to 20 billion in total, and it was global. On one hand, that kind of growth was phenomenal. On the other hand, it became a much bigger place, and I found myself thirsting for a smaller private equity firm where I could play a larger role. Bain had grown bigger with bigger deals that are more process intensive. I just found that the size of the deals were taking me away from the activities of the job that I enjoyed the most. Riverside was a good opportunity to get back to working with smaller companies and with management teams to implement business strategies, which is an element of the job I really like. I was also one of five partners sitting around the table and could play a key role in helping to drive and shape the firm.
BT: How are deals typically sourced?
IB: We do proactive sourcing, like attend industry conferences, call companies, meet with companies. In addition to that, we’re cultivating a broad intermediary network. We’re calling on investment banks and brokers. We probably have a database about a thousand market intermediaries. When they have deals that are on stack, they’re sending them to us. Those are broader sell-side processes. And this is an area where the market has shifted a lot. Ten years ago, you would often learn about a deal or a sector for the first time from an investment banker reaching out and educating you about it. Today, and I don’t think Riverside is alone in this, if it's not a sector we know well or a company we’ve heard of, we’re probably going to be less interested. At the end of the day, most of the deals that end up getting consummated are brokered in some kind of way.
BT: While students might have a general understanding of what a private equity firm does, I think I speak for most in having only a vague sense of what happens after a PE firm invests in a company. Could you detail some of the support that a PE firm provides and what that support process looks like?
IB: The approach that firms take are all over the map. But for the most part, private equity firms are seeking to be change agents. It's not enough to find an attractive company and make a passive investment in it. At Riverside, we view ourselves as business builders. What does that mean in practice? We’re partnering closely with management teams. We’re providing a governance role and providing strategic direction at the management level. We’re helping recruit key hires, usually at the CEO level, and providing support on strategic initiative like market research, sharing a perspective on the industry, thoughts on new product launches or market opportunities. We’re also helping with common business building challenges, like formalizing a budget process or commission plans. Most of the companies we invest in have never done that before, and we’re setting up those processes.
BT: Given that Riverside Partners strategically focuses on healthcare companies, could you describe any market shifts that you’ve witnessed in this sector? How has the firm capitalized on those changing opportunities?
IB: What I see as the most significant change is the influx of technology and information into the medical setting. Hospitals tend to be a bit behind other sectors of the economy, but if you look today, they are really feeling the pressure to do more and more with less and less. From what I’ve seen, this has created two key areas of opportunities for third party providers. The first is revenue cycle management or helping medical practitioners recoup every dollar they’re entitled to from insurance companies. It has become a huge field with lots of outsourced specialists. The second is the realm of technology. Gathering more and more data is something you’re seeing at every level. Patient data, pharmaceutical data, reimbursement data, there’s a huge amount of data being processed and analyzed both to improve care for patients and to improve the economics for the medical providers. This has always been true, but I feel that it's really accelerated in the last four to five years.
BT: Has the US China Trade War and US China Tech Wars factored into your considerations and investment decisions? Could you elaborate on some of its effects?
IB: Absolutely. I can think of two companies at Riverside, one of which was a medical supplier that received component electronic pieces from China. It saw significant price increases as a result of the tariffs that were implemented and had to work to figure out what to do with that. Another was a semiconductor supplier that had customers in China and saw interruptions in its business. The second point, what do you do as an investor, is very tricky. For the last 20 years, the story has been growing integration with China. At this point, it's looking less and less clear if that will be the trend. If you’re a US company, do you start looking for suppliers in Vietnam or other countries? As I look, especially with regards to technology, the reality is there’s an interplay between the regulatory regime and companies. We were in a world of global standards and increasingly the regulatory standards in the US versus Europe versus China are looking more and more distinct. It's not impossible to envision a world with different rules and different regimes. My gut tells me that is the direction we’re embarking on: more separation as opposed to more integration. It's a question of just how separate.
BT: To close the interview, across your experiences in private equity, what was the company or investment that you worked on that has been the most memorable?
IB: Every company has its own story. We invested in a company called WeLocalize, which worked with companies like Microsoft, Google, Dell, to help them translate their websites and software into multiple languages. You can imagine it saw tremendous growth. That was an investment I’ll always look back on fondly. We did four acquisitions when we were partnered with that company. There was a great management team. We pivoted multiple times. One of the things that ended up working really well for the company was we did an acquisition that put them in the business of servicing law firms and helping lawyers translate patents. It was just a fun company to work with and had a good financial outcome. It’ll always be on my my favorite investments.
BT: Thank you for your time and for sharing these experiences in private equity!