On Thursday, September 22nd, Robert Bosch GmbH and ItoM Holding B.V. signed an agreement covering the acquisition of 100% of the shares of ItoM Services by Robert Bosch GmbH.
ItoM Holding B.V. was founded in 1998 by pioneers in the semiconductor RF and analogue/mixed-signal circuitry. Since its creation, the ItoM founding team has successfully created a market leader in semiconductor design services with an unmatched IP- and patent portfolio and a global authority in the field of RF and Analogue/Mixed-Signal (AMS) circuits.
TD Shepherd & Co supported the shareholders of ItoM Holding B.V. and the Management Team of ItoM Services along the full acquisition path including the restructuring.
One of the challenges that comes with design services is the cyclical nature of the services business. When the economy tightens and corporates are watching their operational expenses, the first step will be to halt any external contracts/contractors which are not deemed absolutely essential.
Whereas the earlier (staircase) model is a good approach in scaling up revenue and creating new revenue streams, the foundation of the company is still based on the service model: headcount continues to be the main driver (typically up to 60-70% of revenue). In terms of (enterprise) valuation the additional revenue streams, however, will already make a significant difference.
Design services companies typically start small (some exceptions when it concerns management buy-outs) and natural growth is a slow process as it requires hiring and training of engineers based on/driven by the revenue stream of the company. Growth of business is tied to growing the team and it is not always easy to find the engineers.