Financial intelligence company IDIQ is looking to consolidate or acquire in order to launch into new customer segments, President and CFO Bryan Sullivan said.

“We’re scouring the market and have been over the last year,” he said, noting it spends significant time talking with bankers in addition to being proactive in reaching out to companies. Asked about the timing of its next acquisition, Sullivan said, “It seems like more people are interested in talking today than they were a year ago.”

Acquiring would make sense to secure footholds in markets that typically move slower via an organic buildout, Sullivan said, calling out embedded products, employee benefits, insurance, and depositories or regulated financial institutions. The Corsair Capital-backed company would consider targets that also operate via a business-to-business-to-consumer (B2B2C) model, he added.

Temecula, California-based IDIQ is focused on identity theft protection, credit score and report monitoring, and building credit through rental and utility payment reporting.

The most attractive targets would have at least USD 30m in annual revenue and are profitable, Sullivan said, noting it is past the phase of acquiring feature benefits. It would still consider companies that aren’t profitable but wants to see a path to profitability, he added.

IDIQ generated a little more than USD 150m in revenue in 2024 and expects to close this year around USD 160m, Sullivan said. It has a 30%-35% EBITDA margin, he added.

Revenue declined slightly in 2024 when IDIQ cut back on the direct-to-consumer (DTC) side, even though overall profitability did not decline, Sullivan said. About 60%-65% of customers today come via its B2B2C channel, with the remainder from DTC, he said.

Although it has looked at opportunities in Canada and Europe, IDIQ is primarily focused on the US and sees significant growth potential there, he added. Should IDIQ look to acquire a people-intensive business like customer care, it would look at targets where the company already has a footprint, Sullivan said.

The company hasn’t acquired since 2022 when it purchased Resident-Link in February and Countrywide Pre-Paid Legal Services in October. It has been active in the market but lost on a couple of potential buys, Sullivan said.

Valuations have been the biggest headwind to acquisitions, according to the CFO, who highlighted the difficulty in competing against bidders that aren’t as worried about profitability.

“It doesn’t preclude us from looking at those targets because a path to profitability doesn’t necessarily scare us, but a lot of things we looked at didn’t have a reasonable timeframe to profitability,” he said.

The deals it has missed out on have sold at high-teen EBITDA multiples, Sullivan said.

IDIQ has primarily financed deals to date with pure cashflow, but it would consider a combination of debt and equity for future transactions, Sullivan said. It has good debt partners in US Bank, Fifth Third, Truist, and Regions. Corsair, which invested a majority stake in December 2020, also seems supportive of potential buys, he said.

Asked about Corsair’s potential exit, the CFO said there are always conversations several years into a hold but there is no process at this time. Sullivan said he and CEO Scott Hermann would love the opportunity “to continue to grow as we are,” with Corsair, another sponsor, or a strategic.

Corsair did not respond to a request for comment.

Logical strategic bidders of IDIQ, which straddles both identity theft management and credit education, could be in the telecom space, insurance, or any company with a large consumer base that wants to sell other products to its consumers at low or no acquisition cost, Sullivan said.

Competitors include Aura and Lifelock on identity theft protection as well as Self, Intuit’s Credit Karma, Credit Sesame, and NerdWallet on the credit education side, Sullivan said.

IDIQ has more than 230 employees, including about 30 in Chennai, India.

The company was founded in 2009 by Mikol Sesker, who no longer has an active role on the board but remains one of the company’s larger shareholders, Sullivan said. It has served around 5.5 million customers since inception.

BDO does the company’s accounting work, including quality of earnings around potential acquisitions. IDIQ uses several law firms, including Simpson Thacher & Bartlett and Akerman. It banks with US Bank.