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Thursday, Mar 28, 2024

Internet Outsourcing Firm Buys IDS

Internet financial outsourcing firm Online Resources Corp. has purchased Woodland Hills-based software development company Integrated Data Systems for $5 million in cash and stock, plus an assumption of $300,000 in debt. The recently closed transaction also includes an earnout if future IDS revenue significantly exceeds its trailing 12-month revenue of $3.2 million. As for the immediate future of IDS’ approximately 30 employees scattered between its Woodland Hills and Pleasanton, Calif., locations, Online Resources has stated that no layoffs are planned. In fact, Online Resources is in the process of hiring more employees locally to grow the company, which will fit in its Online Resources Banking Division, officials said. “We are currently hiring at the Woodland Hills facility. There’s no set number exactly that we plan to hire, it depends on what we can do with the business. There are no limits,” Catherine Graham, Online Resources’ executive vice president and CFO said. “Our intention is that the operation in Woodland Hills will stay where it is and will continue to service their old clients and new ones out of that location.” The producer of software programs for the banking industry, IDS had accumulated many large accounts since its inception in 1990. Since Online Resources primarily develops outsourced Internet financial solutions for companies nationwide, the company found IDS’ line of software an attractive option to add to its pre-existing suite of products. “We serve the same type of clients, but with complementary product sets. There were products of theirs that can be sold in our distribution channel and vice versa,” Graham said. “The corporate culture fit was also excellent. The people from IDS view their clients and relationships the same way that we do.” Though IDS had not been actively on the market, Online Resources decided to make a bid after working with the company on a cross-company project. The negotiations took three months. According to Wayne Johnson, an analyst with Raymond James & Associates, acquiring IDS made sense for Online Resources. “IDS provides in-house software models and they serve some big financial institutions. By buying them Online Resources will get have more products and have larger customers, which means more bang for their buck,” Johnson said. “It makes their company more effective and complete and the purchase price was reasonable. I think it will make them more attractive to larger customers.”

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