Saggezza considering Midwest, East Coast acquisitions, CEO says
March 28, 2019
by Nidi Madhavan, Mergermarket
Saggezza, a Chicago-based technology services firm, will continue pursuing buys after acquiring another Midwest player this month, CEO Arvind Kapur said.
Last week, Saggezza announced it had acquired Milwaukee-based consulting and staffing firm Omni Resources. The deal gives the company new technical capabilities and expands its presence in the Midwest, where it has a high concentration of middle-market customers. The company previously acquired data analytics startup 10Jumps for an undisclosed sum in 2013, its first acquisition to date.
Moving forward, the company plans to sustain an organic growth rate of 20% year-over-year, and would pursue any growth beyond that rate through additional strategic acquisitions, Kapur said. He did not disclose revenue or profit figures for the 600-employee company.
“We’ll digest this (acquisition) for a few months before going back to the market,” Kapur said
regarding timing. The company is eyeing targets that can strengthen its capabilities in data analytics, user experience and cloud computing. The company also could look for acquisitions to help it grow its customer base in the Midwest and the East Coast.
Saggezza works with middle market companies in verticals including retail, hospitality, financial services and business services. Sixty-five percent of its business is in the US, with another 25% in the UK and the remainder in India.
The company worked with an undisclosed, Chicago-based investment bank to analyze a number of targets before acquiring Omni through an auction process, and will continue to evaluate opportunities, Kapur said. The company is also receptive to approaches from other bankers representing targets.
The privately held company financed the Omni deal internally, and its growth to date has been funded through cash flow and internal capital investments from shareholders. Kapur and several other management team employees collectively own 100% equity in the company.
Saggezza is primarily eyeing targets with approximately 50 employees, but could seek outside funding to finance a larger acquisition “if it would help get us to the next level,” Kapur said.
“We’re not actively in the market for capital, but we do get inbound interest,” Kapur said, noting that company is beginning to consider bringing on a financial partner at its current size to help fund M&A efforts.
Kapur said that Saggezza is likely “beyond the size of a traditional VC” and would look for a financial investor who understood the technology services space and has a track record of building similar companies.
Saggezza, which was founded in 2006 by Kapur and Saggezza COO Socka Suppiah, provides customers with digital data analytics, user experience software and migration to cloud-based servers. In 2017, Saggezza sold its analytics and intellectual property software platform to Cisco [NASDAQ:CSCO] for an undisclosed sum to focus on the consulting and services side of the business, Kapur said.
Kapur said that Saggezza is focused on building brand awareness and growth for the time being. “When we have more inbound interest and a financial partner at the table, then we can think of either going public or finding a home with a strategic acquirer,” he said regarding an exit.
First Midwest Bank provides commercial banking services for Saggezza.
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