SI International to buy Matcom International
- By Patience Wait
- Dec 18, 2003
SI International Inc. is buying Matcom International Corp. in a $65.8 million cash deal that should close in the next two months. The acquisition includes another $7.9 million if Matcom hits certain short-term revenue objectives.
SI is picking up more information technology and engineering services capabilities in areas such as software development, enterprise systems, homeland defense, integration and training and logistics support.
Matcom was founded in 1983 and has about 500 employees. Customers include the departments of Defense, Homeland Security and Justice, the Air Force, the Federal Retirement Thrift Investment Board and the National Institutes of Health.
"Right now, one of the things we'll be doing is ? communicating with Matcom's employees and customers about who we are, and that we want to provide service at the same level, or even better if that's possible," said Ray Oleson, SI's chairman and chief executive officer. "Matcom had just tremendous results. All their customers were incredibly positive about the company."
Oleson said he expects the deal to close in 30 to 60 days.
As part of the due diligence process, SI interviewed Matcom's top 20 customers, which represent 98 percent of its business. On a scale of 1 to 5, they rated Matcom a 4.6, Oleson said.
"This kind of solidifies us as a player in larger bids, but it also gives us a lot of complementary technologies," he said. "I'm very pleased, because we're not in any identical customer set. For example, we both [work with] the Air Force, but [in] different parts."
Oleson said that Louis Ray, president and CEO of Matcom since 1989, will work with SI as a consultant to ease the transition, but that no final decisions have been made about how the two companies will integrate their operations.
Matcom's Ray said that after assisting in the integration, he intends to take a vacation.
"I haven't had any time off, effectively, for 35 years," Ray said. "For a few years now, I've wanted to upgrade some of my pilot's licenses, [so I plan to] pick up my multi-engine pilot's licenses, do a little traveling, visit some friends."
After the break, though, Ray said he will probably go back to work and get involved in something new.
Matcom had conversations with "six or seven" companies over the past several months about being acquired, Ray said, and he is very pleased that SI is the buyer.
"If you look at the fit, it could hardly be any better," he said. "They gain an ability to compete from a much larger base, [and for Matcom employees] it presents new opportunities for growth, opens up many more promotion opportunities."
For the 12 months ended Sept. 30, Matcom had about $70.4 million in revenue. In the company's fiscal 2003, which ended March 31, approximately 99 percent of Matcom's revenue came from work with the federal government ? 40 percent came from Defense Department agencies and 59 percent from civilian agencies. The company generated 78 percent of its revenue as a prime contractor.
Reston, Va.-based SI International reported 2002 revenue of just under $150 million. Founded in October 1998, the company has 1,300 employees. SI went public in November 2002, and was ranked No. 83 on Washington Technology's 2003 Top 100 list.