StarTek Buys 2,300-Person Business Outsourcing Firm For $16M

StarTek has acquired a business processing outsourcing firm with $67 million in annual revenue in hopes of diversifying its client base and adding higher-value service offerings.

The Greenwood Village, Colo.-based company, No. 85 on the CRN Solution Provider 500 with $250 million in yearly sales, said its purchase of Accent Marketing Services will bolster its customer engagement services and analytics capabilities. The deal with advertising holding company MDC Partners for Accent is expected to close by May 31, according to StarTek.

"Taking on debt is not a decision we made lightly, and we are determined to increase margins," StarTek CEO Chad Carlson said during an earnings call Monday. The acquisition was announced at the same time as StarTek's first-quarter results.

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StarTek is financing the acquisition of Jeffersonville, Ind.-based Accent through its new $50 million secured revolving credit facility from BMO Harris Bank. The $16 million purchase price is about 3.5 times the earnings before interest, tax, depreciation and amortization of Accent, according to the company, and should increase StarTek's profitability by 2016.

Accent employs 2,300 across six facilities in the United States and Jamaica, and supports 18 clients from industries such as telecom, technology, retail, financial services and consumer products. Better-known customers include Asus, BJs, Firestone, Panasonic, Sharp, Sprint and Whirlpool, according to the company's website.

The majority of Accent's business is domestic, though a portion of it will be categorized as near-shore, StarTek Chief Financial Officer Lisa Weaver said during the earnings call. Given the number of additional employees added through the acquisition, Weaver said, StarTek is unlikely to undertake significant organic expansion in 2015.

Once the deal closes, StarTek will have more than 50 clients and nearly 14,000 employees operating in five countries. The company's largest client -- T-Mobile -- will now make up only 25 percent of its overall revenue; AT&T and Comcast are StarTek's second- and third-largest customers, respectively, today.

StarTek acknowledged in a filing with the U.S. Securities and Exchange Commission, though, that Accent also has a significant concentration of customers in the telecommunications industry, which is subject to the same risks as StarTek's current business.

Accent's data-driven approach should help StarTek maximize its engagement with clients and help generate better customer behavior, Carlson said. StarTek's newly completed IT platform should make it easier to quickly integrate Accent, while Accent's contact center services and omni-channel approach is built to capitalize on social media, online and phone opportunities, according to the company.

The deal will further enhance the analytic capabilities StarTek gained through its 2013 acquisition of Ideal Dialogue, the company said.

"We have a lot of work to do," Carlson said, "so we'll get at it."