A blockbuster merger with a Midwest competitor last summer has gone faster and better than expected, according to Irvine-based IT services provider and consulting firm Trace3 Inc.
Last August, the privately held firm—which provides cutting-edge cloud, data intelligence, security, software development and operations, and enterprise IT services to thousands of corporate customers—announced plans to merge with Grand Rapids, Mich.-based Data Strategy and Optio Data.
The deal, bankrolled by Miami-based H.I.G. Capital LLC, a private equity firm that in 2017 took a majority stake in Trace3 on undisclosed terms, was touted at the time as one that would boost Trace3’s revenues from a Business Journal estimate of about $750 million to about $1.1 billion.
The end result? The combined firm ended last year with $1.2 billion in revenues, Trace3 said last month.
It’s the sixth consecutive year of top-line growth exceeding 20%, according to Trace3, which was founded in 2002 by entrepreneur Hayes Drumwright, who sold his stake in the company to H.I.G.
The $1.2 billion 2018 revenue figure will likely land Trace3 among the top 15 or so private companies based in Orange County; a year ago it was No. 37, according to Business Journal records.
Beyond the merger—integration of the firms was completed in April, resulting in the launch of the Trace3 brand in the Midwest and Southeast regions, and giving the firm a national presence—growth was a result of organic account expansion, the company said.
The company has been “broadening the reach of its innovation and research platform, including consulting services for cloud computing, security, artificial intelligence, and machine learning,” Chief Executive Tyler Beecher said.
Beecher took the top spot at the company in 2014. Last year, he told the Business Journal he was looking to boost revenue to $2 billion by the end of 2020.
“We are a growth machine,” he said following the Data Strategy deal. “I think it’s going be easier to get to $2 billion” than $1 billion.
Less Cali-Centric
Trace3’s customer base has historically been strong in finance, securities, healthcare, entertainment and manufacturing. It competes against the likes of Accenture PLC (NYSE: ACN), McKinsey & Co. and Presidio Inc. (Nasdaq: PSDO). About 75% of its work was done in California prior to last year’s merger.
This year, growth will be driven by “the cross-selling of consulting services, managed IT solutions and core data center technologies within the consolidated customer base,” the company said in statement.
Its primary contact at its clients are those firms’ chief information officers.
In addition to proprietary research, Trace3 customers “now have access to a unique venture capital-briefing program that helps CIO’s accelerate digital business transformation,” the company said last month.
The company’s website lists about 40 technology partners whose services are resold to customers. They include firms with OC ties like Western Digital Corp., Cylance Inc. and CrowdStrike Inc., in addition to Dell EMC, Google Cloud and Amazon’s AWS.
Trace3 employs nearly 850 companywide following the merger, including roughly 140 people in its Spectrum-area headquarters.
It’s currently looking to add about 10 people locally in a variety of IT positions, as well as hiring managers.
