Staffing firm On Assignment acquires government services contractor for $775 million
Calabasas staffing firm On Assignment Inc. will acquire government services contractor ECS Federal in a $775-million cash deal, the two companies said Wednesday.
Shares of On Assignment were up 9.3% at $75.31 around 9:45 a.m. PST.
Founded in 1985, On Assignment began as a lab support staffing agency and now provides staff to companies in industries such as tech, healthcare technology, digital and life sciences. In 2015, On Assignment acquired Los Angeles staffing firm Creative Circle, which specializes in providing workers in the digital, marketing, advertising and creative sectors.
The ECS Federal deal will help On Assignment expand into government services contracting, which is seen as a stable customer base. The acquisition is also expected to help On Assignment manage potential volatility in demand for staffing, as well as uncertainties from “a more challenging economic environment,” Chief Executive Peter Dameris said in a statement.
Fairfax, Va.-based ECS Federal specializes in providing information technology expertise, such as cybersecurity and IT modernization, to government customers. The company was founded in 2001 and has more than 2,000 employees nationwide.
The company’s long-term contracts last, on average, about five years. ECS also has a backlog valued at $1.6 billion, Dameris said.
“On Assignment has very little exposure to the government services contractor space,” said Jeffrey Silber, managing director of business and industrial services and education research at BMO Capital Markets. “I think they’re diversifying into an area that gives them a little more visibility and a safer, longer customer base.”
ECS’s government contracting experience could also apply to On Assignment’s current clientele.
In his statement, Dameris highlighted ECS’s experience in cybersecurity for the defense industry as a potential boon for On Assignment’s current customers, “given the increased frequency and complexity of cyber attacks for customers everywhere.”
The combined company will have more than 24,000 consultants, about 2,900 of whom have security clearances, Dameris said. The deal is subject to regulatory approval and is expected to close in April, at which time On Assignment plans to change its name to ASGN Inc.
Twitter: @smasunaga
