IT Staffing Report: Dec. 12, 2013


On Assignment buys IT staffing firm for $94 million plus earn-out

On Assignment Inc. (NYSE: ASGN) acquired information technology recruiting firm CyberCoders Holdings Inc. for $94 million in cash plus a possible earn-out of $11 million.

CyberCoders has estimated 2013 revenue of $55 million with an EBITDA margin of approximately 25 percent. On Assignment estimates its acquisition of CyberCoders will increase its mix of permanent placement revenue to more than 4.5 percent of consolidated revenue — the percentage of perm placement is presently at 1.7 percent. It will also result in an estimated expansion in consolidated gross margin of 175 to 200 basis points.

CyberCoders is based in Irvine, Calif., and has offices in Los Angeles, Boston and New York. It has a team or more than 200 recruiters that place middle- and senior-level professionals with IT, healthcare and life sciences skills in permanent positions with a majority of its revenue in IT. The firm includes a proprietary parsing software for recruitment that allows it to target high-value contacts.

CyberCoders was founded in 1999.

The CyberCoders brand will continue as a division of On Assignment. In addition, CyberCoders founder and CEO Heidi Golledge and Chief Technology Officer Matt Miller will remain with the company. Golledge will report to On Assignment Chief Operating Officer Michael McGowan.

“We believe that On Assignment’s more than 600-person sales team will accelerate CyberCoders’ growth by sharing with them the permanent placement leads that come through our Apex, Oxford, healthcare and life sciences divisions,” On Assignment President and CEO Peter Dameris said in a press release. “These are leads that historically we have not pursued or aggressively worked on, and are not easily filled by our existing staff.”

The business complementary with little integration risk, Dameris said.

“The acquisition will also allow us to better serve our customers since we will now be able to not only meet their staff augmentation needs, but also provide them with permanent placement services on a contingent basis,” he said. “As a result, we believe that CyberCoders complements our current service offerings across all the On Assignment divisions quite well.”

CyberCoders was acquired from private equity firm Riordan, Lewis & Haden.

On Assignment also acquired physician staffing firm Whitaker Medical LLC for $17.1 million in cash and earn-out of $5 million. In addition, the company sold its allied healthcare staffing business to Cross Country Healthcare Inc. (NASD: CCRN) for $28.7 million.

Whitaker Medical is based in Houston with offices in Atlanta; Austin, Texas; and Huntsville, Ala. It has estimated 2013 revenue of approximately $27 million. It will become part of On Assignment’s VISTA Staffing Solutions business.

In addition, On Assignment sold its allied healthcare division to Cross Country Healthcare. The allied business accounted for approximately 2.5 percent of the company’s consolidated revenue. The sale did not include On Assignment’s health information management practice, which will become part of its Oxford Healthcare IT group.

On Assignment will retain the allied health business' working capital of approximately $3.6 million.

One of On Assignment’s last major deals was its purchase of Apex Systems Inc. for $610.8 million in May 2012. Apex provides IT staffing for the middle market while On Assignment’s Oxford division serves the high-end IT market. On Assignment also sold its travel nurse division for $31.0 million earlier this year.

On Assignment is based in Calabasas, Calif.


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