ICon Acquires Synergy Services — Independent Workforce Ecosystem Continues to Take Shape

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ICon Professional Services announced Monday its acquisition of Synergy Services for an undisclosed amount. The two companies are, at their core, providers of compliance and payment services that allow organizations to engage independent workers. The deal, according to the press release, was facilitated by Serent Capital, a private equity firm that became the majority investor in ICon in February.  

We had the opportunity to talk with ICon CEO Teresa Creech and Synergy Founder and CEO Tim Miller to gain some additional insights into the acquisition and the rationale of combining the two companies.

The Management Perspective

The combination of the two companies would broaden the client base and market reach, accelerate the achievement of scale and support more investment in technology, services and support and deliver more value to clients, Creech told us, echoing her rationale in the announcement of the deal.

“ICon and Synergy will leverage their extensive solutions portfolio to better serve clients across a greater share of the overall marketplace,” Creech said in the press release. “Our clients will benefit from the strongest leadership team in the industry, who are focused on anticipating and addressing the changes in engaging and maximizing independent talent.”

Creech emphasized that the acquisition was not a consolidation play — which would be typical in contracting markets — but rather a way to lead and meet customer needs in this rapidly expanding market.

As for growth, Tim Miller told us that Synergy has been growing at a rate of 35% and said that ICon has been growing at a similar rate.  

“This merger accelerates the path for both companies to lead the market,” Miller said in the press release. “Together, we are the best equipped partners to help clients tap into independent talent with the greatest flexibility, efficiency and risk mitigation.”  

In addition to being a solid aggregation play, the combination of the two companies does appear to be quite complementary. Though Creech told us that technology was not a driving factor in the acquisition, the two businesses’ technologies would complement one another.  

ICon, with iConnect, has largely focused on compliance evaluation, invoicing and vendor management system (VMS) connections. Synergy, with its Talent Community platform, has, as noted in the press release, focused on the onboarding, deployment and curation of independent talent pools.

“What’s most important is building these communities of independent talent in a way that hasn’t been done before,” Miller said.

Creech told us that independent workforce was and would be growing. Of course, the growing “gig economy” has seen increased awareness, but the independent workforce is really a generational development. The new generation — especially the population with sought-after skills, such as STEM — has a whole different outlook on how to pursue careers and engage in work. At the same time, organizations are increasingly starved for this kind of talent and will increasingly need to tap into this independent workforce/talent populations. Put the two together, and you have a growing market for effective intermediaries.

Spend Matters Take

As Spend Matters has been reporting, various contingent workforce solution and service providers have been intensifying their focus on the growing independent workforce, establishing ways for organizations to access these relatively untapped sources of talent. This acquisition represents one of an increasing number of developments in this area — and a very significant one at that.  

The deal brings together two strong independent workforce solution and service providers, combines their depth in compliance assurance and payments and augments ICon’s sales and service expertise to accelerate addressing the growing market. We believe the combination is accretive — certainly with respect to addressing the expanding market. There also appears to be potential to integrate complementary technology applications to have a source-to-pay (S2P) solution well-grounded in compliance assurance — something absolutely essential today, along with technology, to expand businesses’ engagements with independent workers.

That covers the ICon acquisition as an isolated event. But the acquisition has more significance in the broader context of an evolving “intermediation space” between enterprises and independent workforce.  

We’ve called this space a “white space,” because it has been populated by few intermediaries touching a small volume of independent worker engagements relative to traditional staffing temp placements. But now that independent workforce supply and demand are, as noted above, increasing, the “white space” is being populated with either newly formed, mutating or combining intermediaries.

The ICon acquisition is certainly a combining development, purposed to yield a more resourceful and capable — perhaps the leading — intermediary in this expanding market and now developing “intermediation space.” It is a good move, because there is competition looking to get a solid share of the market, if not a dominant one.
How it will all take shape, and who will be winners or losers, is impossible to predict, because rules of the game and successful strategies are not yet clear enough, as they are in the traditional staffing world. Therefore, once again, we see the acquisition as a good move in the right direction and increasing the chances of success.  And we will be following ICon’s ongoing development with great interest.

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