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On Assignment to pay $775 million for federal contractor; changing name to ASGN

January 31, 2018

Professional staffing firm On Assignment Inc. (NYSE ASGN) struck a deal to acquire government services contractor ECS Federal LLC for $775 million. On Assignment also announced it will change its name to ASGN.

On Assignment signed a definitive agreement to acquire 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 expected to close April 2, subject to regulatory approvals and customary closing conditions. On Assignment also intends to change its name to ASGN Incorporated, effective April 2, which it stated better reflects its “evolving position as a leading provider of human capital in IT and professional services solutions.”

ECS — founded in 2001 and headquartered in Fairfax, Va. — provides cyber security, cloud, DevOps, IT modernization and advanced science and engineering solutions to government enterprises. It will become a division of On Assignment and continue to operate under the ECS brand name. CEO George Wilson and the current leadership team will remain.

“ECS’ government services solutions will complement and elevate our offerings and strengthen our position as a premium IT and professional services provider,” On Assignment CEO Peter Dameris said. “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 five 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.”

ECS has estimated 2017 revenues on a pro forma basis will be approximately $586.4 million. Estimated pro forma results assume a business by ECS in April 2017 occurred at the beginning of the year. For 2018, ECS expects high single-digit year-over-year revenue growth.

On Assignment estimates approximately $2.6 billion in 2017. However, revenue would be approximately $3.2 billion on a pro forma basis assuming On Assignment had acquired ECS at the start of the year.

“All companies struggle with identifying and attracting highly qualified technical personnel in today’s economy,” Dameris said. “Our combined 24,000-plus 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.”

Also today, On Assignment reported preliminary fourth-quarter revenue will be $679.0 million, up from previously announced estimate of $658.0 million to $668.0 million.