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June 7, 2023

By: Dayna Fields

Cause + Effect Strategy, a business intelligence and analytics consulting firm, hopes to close an acquisition that would nearly double its size by the end of this year. said co-founder and President, John Loury.

Rochester, New York based CE Strategy will continue to evaluate M&A targets of similar size, he said. It could structure deals in a way that would allow  it to buy out a company’s ownership over time, he said, noting that it would fund deals with internal cash flow.

Founded in 2015, the company has been profitable since its third year in business, he said. It has seen roughly 46% cumulative growth over the past three years, he noted. Besides Loury, its owners are other co-founders Michael Sutton, VP of client service and Eric Webber.

In roughly two years, it expects to double revenue and increase profit margins, at which time it could consider raising outside capital, he said.

Over the past year, CE Strategy has rebuffed multiple buyout and investment offers from finance related consulting firms. It was also approached to create a joint venture with a private equity firm that would offer up its portfolio companies as clientele if CE Strategy executed business operations, he said.

With 21 employees, the company is growing into a size that is clearly attracting industry attention, he explained.

“We’ve had more (M&A) interest in the last either months than in the last eight years,” he said, noting layoff in the technology sector mean CE Strategy is increasingly being tapped as an outsourced resource for companies. “We’ve declined all (investor approaches) to date,” he said, noting it prefers to surpass at least USD 5m in revenue before it considers outside investment.

CE Strategy expects to not only grow in size over the next few years but also expand its EBITA margins because average fees in the industry continue to grow. The company’s core offering include consulting on business strategy related to data, data architecture, data integration, and BI & analytics.

“Large companies generate vast amounts of data, and they want to get to the point where they can use it. The next challenge (for consulting firms) is proving expertise, and the fastest way is to buy someone who is an expert.”

John Loury, President, Cause + Effect Strategy

As an example he pointed to the 2020 acquisition of New York-based EagleDream Technologies, a cloud-based data transformation company, by professional services partnership PwC for undisclosed terms. At the time of the deal EagleDream had 100 employees who then transitioned into PwC’s advisory business, according to a press release.

Another deal he pointed to is the acquisition of Newcomp Analytics, which offers data engineering and visualization and business intelligence analytics for a variety of industries, for CAS 20.3m in revenue with an adjusted EBITDA of CAD 3.4m for the year ended July 2022.

Loury said the nations largest CPA and accounting firms, such as Deloitte and EY, could also show an appetite for acquisitions in the space of data and analytics visualization and business intelligence tools.