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RLH Cashes Out of CyberCoders

Riordan, Lewis & Haden Equity Partners has sold its majority stake in Irvine-based CyberCoders Holdings Inc., a fast-growing recruiting firm, to global professional-services company On Assignment Inc.

The acquisition came to $94 million in cash, with the potential for an additional $11 million in milestone payments.

Technology-driven CyberCoders is focused on filling mid-level positions in various business sectors nationally. It has 252 employees, with 155 in Orange County and others at offices in Los Angeles, Boston and New York.

CyberCoders had been overseen by Irvine-based partners of Riordan, Lewis & Haden since 2007, when the L.A.-based private equity firm made a “sizable” investment to help recapitalize the 8-year-old company through a restructuring process.

“We worked to build a business that I think everybody on the team could be proud of,” said Murray Rudin, a managing director of Riordan, Lewis & Haden in Irvine.

Rudin and fellow RLH Managing Director Kenneth Hubbs served on the board of CyberCoders prior to the sale.

“It was a strong return for RLH investors,” Rudin said of the deal. “At the end of the day, what we’re most proud of is that we had a part in building a great business that created lots of jobs and helped entrepreneurs realize their dreams.”

The investment firm currently manages more than $600 million in assets. It typically invests $10 million to $50 million of equity capital in companies that have revenues ranging from $20 million to $200 million.

Calabasas-based On Assignment is a professional placement-services firm with 130 offices globally and about 2,500 employees. The publicly traded company had a recent market value of about $1.79 billion.

The acquisition, pending regulatory approvals, is expected to close before year-end. CyberCoders will become a division of On Assignment and will continue to be headed by CyberCoders cofounder Heidi Golledge and Chief Technology Officer Matt Miller.

Golledge served as chief executive and president before the sale. She will retain the title of president under CyberCoders’ new ownership.

“It was key to keep our brand and our culture, to keep doing business the way we’ve been doing business,” Golledge said. “As a division, we are allowed to do that. It’s not like we’re folding into a larger company.”

CyberCoders’ Growth

CyberCoders has grown rapidly in recent years, landing on the Business Journal’s 2011 and 2012 lists of fastest-growing private companies based in Orange County. The company had an estimated $39 million in revenue in 2012. It’s expected to end this year with $55 million in revenue, according to On Assignment.

CyberCoders’ growth was more “dramatic” when accounting for the recent recession, said Rudin, who cited a fivefold jump from 2009 to 2013.

The recession posed a challenge, but relatively low levels of debt helped CyberCoders’ management team push for growth and expansion through the financial crisis, according to Rudin.

“The economy was soft, but we encouraged CyberCoders to take an approach that we call ‘passing in the curve,’ ” he said, likening business development to auto racing. “Better drivers often pass others on the curve, when they often have to slow down. All the other drivers were slowing down during the recession, laying people off, generally shrinking. We encouraged Heidi and her team to take advantage of that situation and to hire great people, to continue to develop new capabilities. That really paid off, because as the economy started to come out of the recession, their results leaped ahead.”

Golledge was awarded the Entrepreneur of the Year award this year by Ernst & Young for the Orange County, Inland Empire and Las Vegas region.

The CyberCoders acquisition could help On Assignment boost its “permanent-placement revenues” to more than 4.5% of its overall revenue, up from the current level of 1.5%, according to the company.

On Assignment had roughly $1.2 billion in revenue last year. n

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