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Resources Connection Inc. didn’t wait long to back up Chief Executive Kate Duchene’s mid-July stated corporate goal of becoming more digitally focused; it just made a major investment in that specific sector.
The Irvine-based business consulting firm (Nasdaq: RECN), which offers a variety of finance, business strategy, IT, and risk and compliance services to its corporate clients, recently acquired Veracity Consulting Group LLC, a tech-focused Virginia-based firm geared toward Fortune 500 and healthcare companies.
The deal is for $30.6 million in cash, plus potential additional payments based on longer-term performance.
It’s the largest purchase in over a year for Resources Connection, which operates under the Resources Global Professionals or RGP name.
It’s Orange County’s fourth-largest management consulting firm by local consultants—109 as of June—and the 35th largest public company based here, with a nearly $540 million valuation.
Duchene, who has been with the company since 1999 and became CEO in 2016, has overseen a variety of forward-looking corporate changes the past three years: shifting from a project-based consulting model to offering more ongoing advisory services to its clients, particularly in data integration and mergers and acquisitions; and implementing a centralized governance structure for RGP, which has about 4,000 workers scattered across the country.
In July’s earnings call with analysts, she announced a new area of modernization, to “become a more digital business.”
That plan has three core priorities, she said: to build and commercialize a digital engagement platform for the company; to serve clients in their own transformation and user experience for cloud-based products; and building commercialized digital product offerings for our clients and the company.
The initiative is expected to lead to more hiring in design-thinking talent, acquisitions, and ultimately a more profitable business at RGP, the company said.
The buy of Veracity fits the bill on the acquisition front. The company “combines business-led digital strategy and design prowess with deep technology expertise,” according to RGP, which said that Veracity brought in about $21.4 million in revenue last year, up 58% year-over-year.
Veracity “offers us an instant and credible foundation upon which to build our digital innovation offerings,” said Duchene, who in 2017 was one of five honorees at the Business Journal’s annual Women in Business Awards.
The just-bought consultancy’s healthcare focus is one area that RGP has a focus on.
“There’s one particular large healthcare client in—that’s out of Europe, and we’re helping them with one of their most strategic digital transformation projects, because they trust our way of client service,” Duchene told analysts.
It’s a large change from the company’s roots.
“In the early days, I think there was some hesitancy about, well, aren’t we really at the core finance and accounting operations support shop,” she said.
Now, “the answer is no, we can be more.”