Integrator Connection: Growth through Acquisition

SDI looks to triple its size as part of an aggressive expansion plan


System Development Integration LLC (SDI) of Chicago is on the fast-track to expansion. And the growth will continue. “The firm has set a financial growth goal of achieving $200 million in revenues by 2017,” says company founder and CEO David A. Gupta. “SDI will achieve its growth goals by extending its target geographies, entering into new markets and adding new solutions and skill sets.”

With its two most recent acquisitions made in just the past few months, SDI has grown to a $70 million operation. Gupta’s goal of tripling size by 2017 is aggressive, but he says that SDI has “more than adequate financial capacity” to meet that objective. “These activities will happen both organically and via acquisition, and will be funded by our private equity investors LLR Partners,” Gupta says.

In early September, SDI acquired X7, a Washington, D.C.-based systems integrator — named the ninth-fastest growing systems integrator in Security Dealer & Integrator’s 2013 Fast50 awards, and was ranked No. 5 in 2012.

In June, SDI purchased i-sys Corp., a systems integrator that focuses on security, environmental and fire safety solutions. Its suite of clients includes major financial institutions, airports, seaports, state/local government, and universities from its offices in California, South Carolina and Tennessee.

“Both firms had an attractive client list — especially large private-sector clients,” Gupta says. He notes there were several similarities in service offerings and an ability to cross-sell other SDI offerings such as network/infrastructure and enterprise apps. While they met the founders’ vision of growth, they also brought to the table proven ability to manage large, long-term contracts. “They have geographical locations that help expand our national footprint,” Gupta says.

Just as important, there was a good “cultural fit” — something Gupta feels is important when bringing two companies together. “Culture is something we proactively manage,” Gupta says.

They expect exceptional delivery of services and that all members of the team will be there for the client. “Any candidate (for acquisition) will have to have that type of dedication,” Gupta adds. “There must be community involvement and mentoring of both their people and other firms.”

 

Not All Qualify

There are companies SDI has looked at that they decided not to acquire. “With the LLR Team, SDI had identified more than 50 potential candidates for acquisition activity that fit our initial profile,” Gupta says. He says the list was “down-selected” when organizations did not meet certain criteria.

First on his list is what he calls “Culture Fit” — a meshing of professional services and client commitment. They also were looking for firms that complemented existing SDI service offerings and would expand SDI’s geographical and/or client base.

Among the other factors were a need to find acquisitions with annual revenue greater or equal to $12 million, ability to maintain long-term contracts, a record of consistent revenue and profit growth over time, and demonstrated opportunities to sell additional services within the company’s existing client base. Even in a business as far-spread as the security integration field, it takes some doing to find potential acquisitions that meet all of those requirements and will help expand on SDI’s basic business direction.

 

Getting Started

SDI originated as the in-house technical staff within Environmental Systems Design Inc. (ESD), an engineering firm in Chicago. In subsequent years, the information services division was sought after to provide standalone technology services to local governments, utility clients and businesses in the real estate, health care and finance industries.

On Nov. 22, 1996, the information services division emerged from the parent company as SDI (System Development Integration LLC) with a mission focused exclusively on providing information technology solutions and advisory services. “SDI has a core competency in successfully managing long-term contracts with our clients, delivering exceptional client care and value-add engineering/advisory services,” Gupta says.

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