Acquisitions happen all the time around the Beltway. But few companies have as compelling a story as SOS International.
Long before it rose to become a leading mid-tier government services integrator to defense and intelligence customers, the Reston, Va.-based company began as a mere dream, operating out of the home of an immigrant named Sosi Setian. Early on, Setian’s fledgling business focused on providing contract interpretation services to the DEA, the FBI, and Customs and Immigration.
With time, SOS International grew not only as a family affair — with Setian’s son, Julian Setian, now serving as president and chief executive officer – but also in focus: After Sept. 11, the company expanded its service offerings to include IT, construction, data analysis, logistics and engineering. (For the full story, check out this recent Fortune piece.)
Today, SOS International’s annual revenue stands at $200 million, and in the latest chapter in its 27 years of operation, the company has just acquired a Virginia-based, defense and intelligence contracting firm, New World Solutions (NWS).
“The addition of New World Solutions increases SOSi’s presence within the intelligence community, particularly in the national capital region,” says Julian Setian, noting that the acquisition adds several new clients to the company’s portfolio such as the National Reconnaissance Office and the National Geospatial-Intelligence Agency, while broadening its capabilities to include cleared scientific and technical intelligence, imagery science, cyber analytics, R&D, program management and specialized security services.
“The thing that interested us about NWS is that they have been serving the national level intelligence agencies, providing high-value and low-density skill sets – high-demand skill sets that the agencies still need, and on an increasing basis,” says Setian. “They are definitely in one of those high-growth areas.”
Diversification has been SOSi’s core approach for years, with the company achieving a compounded annual growth rate of more than 30% since 2002. Setting its sights on new targets, the company formed a board of advisors in 2014 to assist in organic growth, acquisitions and professionalization targets. The current acquisition, which was completed in late January, builds on that well-paved strategy.
“We believe that the time is right to expand through acquisition, to open critical markets and add new capabilities and clients to our portfolio,” says Julian Setian. “We’ve inherited a highly talented team of executives and managers who will continue to lead the firm,” he adds. That team includes Harry Looney, New World Solutions’ president and co-founder, who will continue to lead the firm as a subsidiary of SOSi. Meanwhile, the business will function under SOSI’s Intelligence Solutions Group, led by Vice President Bob Billeaud.
What also unites both companies are shared values, adds Setian. “The primary driver [for the acquisition]was the culture,” says Setian. “New World Solutions is a company that’s been around for quite some time and they’ve managed to maintain a family-like environment within the business, which aligned very nicely with the culture of SOSi – that was very important to us.”
Talk of values isn’t just lip service, not if you revisit the company’s history. Years ago, during the two government shutdowns of 1995, founder Sosi Setian took out a $40,000 loan and split the money with her employees. “To this day,” she recently told Fortune, “they remain loyal.”
Employee loyalty may be one reason the company has weathered what can be a challenging middle market. Another is certainly the company’s ability to differentiate itself, particularly over the last two years, as the middle market has suffered amid defense spending cuts.
“We consider ourselves very fortunate,” says Setian, whose company has experienced its largest organic growth in its history in the last two years alone.
Looking ahead, Setian sees more acquisitions on the horizon for SOSi. “Our approach,” he says, “has been to double-down while things are going well for the company and to acquire high-value companies that have mid-market penetration in some of the areas that interest us and that have sustained growth programs.”
Companies that are sure to catch his eye, adds Setian, are ones that offer a steady, ongoing need for government customers. “The most important thing is to make sure that they build a sustainable business,” he says, “that they build their business on going after contracts that have enduring requirements, that aren’t tied just to temporary spikes in events that are taking place around the world – and that they have diverse portfolios that aren’t concentrated on small business set-aside contracts.”
In the meantime, an expanded SOSi team is busy presenting a more robust front, on behalf of its customer base. “We’re really looking forward to integrating capabilities over time,” says Setian. “This is exciting stuff for both parties.”
