Qualitest seeks acquisitions to reach $1 bln revenue goal
TEL AVIV, Feb 20 (Reuters) - Israeli software testing firm Qualitest is aiming for sales of $1 billion in five years and plans to make acquisitions to reach that goal, CEO Norm Merritt said.
The company currently has annual sales of about $200 million, which are growing by roughly 25% a year. Merritt, who is based in New York, said the company was "very profitable," but did not give further details.
Merritt said the mid-20s annual sales growth was organic.
"It will get us to about $400-$500 million and the remainder will be resolved through acquisitions and we have a very healthy M&A pipeline and a sponsor ... to help make that happen," Merritt told Reuters during a visit to Tel Aviv.
He was referring to London-based private equity group Bridgepoint BRDG.UL which last year bought a majority stake in Qualitest from Marlin Equity Partners. Financial terms were not disclosed but a source close to the deal said the price was about $420 million. .
Bridgepoint will put more equity into Qualitest as acquisition opportunities arise, he said.
"The billion dollar aspiration is achievable given their commitment," he said. "We are at the small end of investments for Bridgepoint. They wouldn't have invested in us if they didn't think we could achieve this plan."
The company is planning an acquisition in the United States "imminently", Merritt said.
He estimated the $140 billion global quality assurance and testing market was growing at 13%-14% annually.
The company's clients include Microsoft MSFT.O, telecom equipment provider Avaya and BSkyB, according to its website.
(Reporting by Tova Cohen Editing by Steven Scheer and Jane Merriman)
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