NCI sees acquisitions as fuel for organic growth

Since going public in 2005, NCI Information Systems Inc. has closed five acquisitions and has seen its revenue rise to $460 million.

But the idea has never been to rely on acquisitions to keep the company growing. During the past six years, the company’s organic growth — growth that doesn’t include acquisitions — has averaged 14 percent.

The role the acquisitions play is to position the company for more organic growth, said Terry Glasgow, president of the Reston, Va., company.

The 2009 acquisition of TRS Consulting is no exception. “We see them as a building block to get us to $1 billion in revenue,” he said.

The $20 million deal is one of the top small-business acquisitions of 2009.

NCI was drawn to TRS by three factors: its customers, leadership and technical skills, Glasgow said.

The company provides data analytics services to several intelligence agencies, which Glasgow declined to name. TRS' particular skill is in rapidly developing information sharing and collaboration solutions, especially for large databases and complex systems, he said.

NCI already was doing analytics work for intelligence customers, but TRS was embedded with a different set of customers that NCI coveted, Glasgow said.

“What really got our attention was here was a company with sticking power, some strong customer relationships and a sterling reputation,” Glasgow said. “We liked that a lot.”

The time also was right for TRS. Having grown rapidly since its founding in 2001, the company and its founder, Richard Stroupe, had reached a crossroads. They needed to invest heavily in infrastructure, such as human resources and business development systems, or look for an alternative, Glasgow said.

“We talked to him about another approach,” he said. "He and his company would become part of our company, and we would supply the infrastructure for their growth. Richard liked that idea because his primary focus has always been on the customer, and this allowed him to stay connected to the customer.”

The TRS deal fit NCI’s acquisition strategy of bringing in new customers and prime contracts or new offerings. The best deals bring some combination of both, Glasgow said.

With TRS, NCI see more than just an opportunity to sell NCI offerings to TRS’ customers and vice versa.

“We can take the total of both and go into customers neither of us were in before,” Glasgow said. “This acquisition gives us more stature and more horsepower.”

More deals are likely in NCI’s future. The company wants to continue to expand its four pillars: intelligence, Army, Air Force and civilian. Its civilian business in particular has needs as it represents just 11 percent of NCI’s revenue. Glasgow said the company is interested in growing in the areas of health care, cybersecurity and homeland security.

But in keeping with NCI’s methodical approach to acquisitions, Glasgow would not offer a prediction on whether the company would close another deal in 2010.

“We are always looking, and there are always opportunities,” he said. “But the cheapest investment is still organic growth. That is what has the best return.”