On Assignment to acquire ECS Federal

On Assignment, Inc. of Calabasas, CA announced on January 31 that it has signed a definitive agreement to acquire ECS Federal, LLC (ECS) from Roy Kapani, the company’s majority owner and founder, and Lindsay Goldberg, a private investment firm, for $775 million in cash. The transaction is subject to various regulatory approvals and customary closing conditions and is expected to close on April 2, 2018.

ECS, one of the largest privately-held government services contractors, delivers cyber security, cloud, DevOps, IT modernization and advanced science and engineering solutions to government enterprises. Combined, On Assignment and ECS will be one of the largest and fastest growing IT and professional services firms in North America.

For the year ended December 31, 2017, ECS estimates its revenues and Adjusted EBITDA (a non-GAAP measure) on a pro forma basis will be approximately $586.4 million and $67.6 million, respectively. Estimated pro forma results assume a business acquired by ECS in April 2017 occurred at the beginning of the year. For 2018, ECS expects high single-digit year-over-year revenue growth.

For the year ended December 31, 2017, On Assignment estimates its revenues and net income will be approximately $2.6 billion and $157.7 million, respectively and its Adjusted EBITDA (a non-GAAP measure) will be approximately $311.4 million. On a pro forma basis, which assumes the acquisition of ECS occurred at the beginning of 2017 (a non-GAAP measure), On Assignment’s revenues and Adjusted EBITDA are estimated to be approximately $3.2 billion and $379 million, respectively. Additionally, the acquisition is accretive to On Assignment’s 2017 Adjusted Net Income (a non-GAAP measure).

Commenting on the acquisition, Peter Dameris, CEO of On Assignment, said: “ECS’ government services solutions will complement and elevate our offerings and strengthen our position as a premium IT and professional services provider. Our addressable end market is now $279 billion by virtue of our entering the $129 billion Government Services space. ECS’ long-term contracts, which average 5 years in length, and robust backlog ($1.6 billion) provide strong revenue visibility and mitigate volatility from permanent placement revenue and a more challenging economic environment.”

Dameris concluded: “All companies struggle with identifying and attracting highly qualified technical personnel in today’s economy. Our combined 24,000+ billable consultants, of which 2,900 maintain security clearances, and our recruiting prowess will strengthen ECS’ fulfillment capabilities, credentials and qualifications as it competes for future awards.”

ECS has well established positions on critical IT systems of national importance which provide unmatched customer access and unique visibility into future technology transformation initiatives. For example, ECS’ domain expertise in cyber security for the defense industry will be immensely valuable to On Assignment’s customers given the increased frequency and complexity of cyber-attacks for customers everywhere.

ECS will become a division of On Assignment and continue to operate under the ECS brand name. The CEO of ECS, George Wilson, and the current leadership team will continue to execute the strategy and oversee the day-to-day operations of the business. “This acquisition immediately introduces a company with the scale, contracts, capabilities, personnel, past performance and ability to compete for the largest opportunities in the federal market. The entire team is energized about the possibilities.” said George Wilson.

On Assignment intends to change its name to ASGN Incorporated to better reflect its evolving position as a leading provider of human capital in IT and Professional Services Solutions effective April 2, 2018.

Source: On Assignment