Can you briefly describe On Assignment’s strategy for growth by acquisition?
Michael Payne: We’re the second largest technology-staffing firm in North America. We’ve grown ten times in the last ten years. The main focus of the company is on STEM: science, technology, engineers, and math. We are laser focused on those industries.
In general, what criteria determines the appropriate companies to acquire?
Payne: We’re very disciplined, and we make it look easier than it really appears from looking at our track record. We look at the nature of the acquisition and divide it into two camps. One, smaller “tuck-ins” are acquisitions that fit into our existing segments and help expand them. The other type of acquisition is a platform—a new segment or company that will help us grow with a specific vertical—a company that can stand on its own two feet. CyberCoders is like that.
The financials also have to make sense. That’s pretty straightforward. The deal has to make sense too. We avoid the trap of falling into a deal based on “synergy savings.” The deal has to stand on its own merits. The culture has to fit—we might spend months or years getting to know a company as part of our “acquisition courtship” process.
How does your role in shared services and as CIO support On Assignment’s growth strategy?
Payne: The tech and back office systems are critical for how we got to market and how we support the business. Other leaders are involved in vetting and due diligence as well. Once a deal closes, my teams pick up the integration work. We look for costs we can eliminate, security that we need to improve, as well as technology, hardware, and software upgrades, all with without disrupting the flow of the company.
So what specifics made CyberCoders a good fit with On Assignment?
Payne: They had a great company culture. CyberCoders really fit a niche and truly complemented our existing businesses, especially in terms of offering permanent placement for technology jobs. Taking on CyberCoders had no channel conflicts with existing customer business.
How is CyberCoders different than some of the other acquisitions?
Payne: Most of our business is contingent staffing—we put people to work on a contract basis for an average of three to five months. CyberCoders is more of a headhunter staffing firm, rather than a contingent labor staffing firm. Having them is really a complement to the other tech areas we were already staffing.
How did you integrate it into the existing business?
Payne: This is about how we brought them in and a story of investment and integration. Well, CyberCoders came from a private equity firm, so their internal management training and back office needed some attention. That meant that we moved very quickly with the plan, over about six to nine months, to rearchitect their back office infrastructure. Then we added approximately one hundred recruiters to their sales force. It was a big investment that has paid off so far.
So what happened next?
Payne: We put a dedicated team on CyberCoders, and we worked to make sure that we communicated the work plan clearly. Their team participated. We were also quick to take advantage of the things that they do very well. They had an incredible, state-of-the-art front office system. We actually picked up those ideas and put them into other parts of the larger business. Whenever there is an acquisition like this, there is lots of learning from one another and leveraging the best of what both of us have to offer the company as a whole.
And it seems that the culture played a big role in it as well.
Payne: Absolutely. Our team was very open to the idea of their team joining us, and working together. They have a fabulous, energetic culture, as well as a great brand, which we didn’t touch.
How do you ensure future growth will go smoothly?
Payne: Because our company has grown so much from acquisitions, we have a blueprint process. There are methods we have developed to quickly assess what we can bring to a particular business and make them more successful. This blueprint touches all the functional areas: accounting, technology, finance, HR, etc. We go through each one, figure out what the touch points are, where the work needs to be done, and then do it. For CyberCoders, this process was inside of six months. We have integrated up to fourteen companies, over the years.