Calian Group has taken another step toward its goal of hitting $1 billion in annual revenues with its first acquisition of a U.S. firm.
Calian – whose products and services include everything from rapid COVID testing and health-care clinics to satellite antenna systems and military training simulations – said Thursday it has agreed to buy Houston-based IT and cybersecurity provider Computex for $38 million.
The deal, which still requires approval from shareholders of Computex’s publicly traded parent company American Virtual Cloud Technologies, is expected to close before the end of the first quarter.
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Calian’s 11th acquisition since the start of 2020 continues the Ottawa-based firm’s push to increase revenues 20 per cent a year through an aggressive mix of M&A and organic growth.
“We’ve worked in the U.S., but we really haven’t had that flag planted. This (deal) is going to do that.”
While Calian previously has targeted companies in Canada, the U.K. and continental Europe, the Computex deal marks its first foray into the U.S.
CEO Kevin Ford said looking south of the border was the next logical move for Calian in its quest to join e-commerce powerhouse Shopify in the ranks of publicly traded Ottawa-based companies with annual revenues of at least $1 billion.
“Clearly, if we’re looking at (billion-dollar revenue) goals, we’re going to have to play in the U.S. marketplace,” Ford told Techopia on Thursday. “We’ve worked in the U.S., but we really haven’t had that flag planted. This is going to do that.”
Founded in 1987, Computex specializes in managed IT services – that is, installing and overseeing wireless networks and other related infrastructure on behalf of its clients – and cybersecurity solutions. It generates annual revenues in the $75-million range, including about $30 million in annual recurring revenues through its managed IT business.
Computex has nearly 200 employees at offices in Texas, Florida and Minnesota. It serves 1,100 customers in the oil and gas, financial services, health-care and retail sectors, including restaurant chain Dave & Buster’s and Texas-based Midland Health Systems.
Cross-selling opportunities
About a quarter of Computex’s sales come from health-care organizations. Ford says that makes it an ideal partner for Calian, which also generates a larger share of its revenues from its health-care division than any other.
“We think it’s a great opportunity for IT, but also cross-selling opportunities,” he said.
Calian surpassed $500 million in revenues for the first time in fiscal 2021, with sales rising in all four business segments – advanced technologies, health, learning and IT.
The firm is projecting revenues of nearly $600 million in the current fiscal year, roughly in line with Ford’s 20 per cent growth target, despite dealing with supply-chain issues and other economic turbulence fuelled by the global pandemic.
The veteran CEO says Calian plans to keep scouring the market for more acquisitions in a bid to diversify its customer base, which once skewed heavily toward government agencies but now includes a growing number of private-sector customers as well.
“We really need to balance out the customers we’re serving, because as we’re seeing through COVID, a lot of sectors are affected,” Ford said. “We’re really trying to make sure we expand our footprint.
“Every one of my business segments right now is out there talking to organizations looking for (M&A) opportunities. Definitely, we’ve got lots of discussions on the go. A lot of people are pinging us now that we’re known as an acquirer.”
Calian shares finished the day up 69 cents at $54.50 on the Toronto Stock Exchange.
