April 28, 2020 12:19 pm ET
Orion Innovation, a private equity-backed technology company, had to do without one key component of the deal-making process when it purchased engineering technology company Tekmark Global Solutions LLC this month: physical contact.
“I’ve been in the private-equity industry for a quarter of a century, and that’s a lot of credit cycles,” said Chip Schorr, senior managing director at One Equity Partners, the midmarket buyout firm that has owned Orion since late 2018. “I’ve never closed a deal and done diligence completely virtually before.”
The transaction, which closed on April 24, illustrates the importance of virtual technology to private-equity firms trying to get deals closed in the midst of the coronavirus pandemic.
Orion, which is based in Edison, N.J., provides technology and services to help businesses design and engineer products and services for their digital platforms. Its services include business intelligence, IT strategy and architecture, application development, cloud and infrastructure services, among others.
Buying Tekmark expands Orion’s presence in the U.S. and deepens its relationships across different industries, including telecommunications and financial services, according to Orion Chief Executive Raj Patil.
Mr. Schorr said Mr. Patil had known Tekmark and its CEO Guy DelGrande for a long time and had been eyeing the company as a possible acquisition target. However, because actual deal negotiations got under way as the coronavirus pandemic intensified, the acquisition process—including Orion board meetings, credit committee meetings, investment committee meetings at One Equity Partners and customer due diligence—all took place over videoconference, phone and email.
“It was much more difficult than a normal transaction,” Mr. Schorr said. “You’re coordinating bodies of people to do work that they can’t do together, and then they are coordinating their teams all toward a common mission.”
Terms of the transaction were not disclosed.
After the acquisition of Tekmark, Orion has more than $300 million in annual revenue and more than 4,000 employees across North America, Europe and Asia, according to Mr. Patil. The deal marks Orion’s fourth acquisition under One Equity Partners’ ownership.
Although Orion’s business has benefited for years from the embrace of digitalization across the business world, the coronavirus pandemic has intensified its push to become more digitally friendly, Mr. Patil said.
He cited examples in several industries, including telecommunications, where operators have had to accommodate a massive shift around the world to a remote workforce, as well as increased internet usage. Financial services firms, particularly wealth managers, are also adapting to the disruption caused by lockdowns around the world, Mr. Patil said. Meanwhile, in the health-care sector, he pointed to large pharmaceutical companies that want to use technology to improve efficiency as they seek regulatory approval for new drugs.
“We firmly believe companies will be looking to turbo charge their digital initiatives,” he added.
Mr. Patil said that although negotiating the deal remotely had its challenges, the fact that Orion transitioned to a remote workforce fairly early in the pandemic helped ease the process.
“We started in early March and by mid-to-end of March, we were fully remote,” he said.