Fast-growing custom software consultancy Test Double has made its first acquisition – rounding out service offerings and expanding the client list for both firms.
Pathfinder Product Labs LLC, product management consultant and coaching, will become an operating unit. All 14 employees join for a combined staff of 113. Terms were not disclosed.
Test Double could make the deal despite a rare dip in sales this year, said Todd Kaufman, Test Double co-founder and CEO.
"Two financially conservative, healthy businesses – those are the types of businesses that are positioned to grow coming out of this (economic) environment," Kaufman told me.
Brett Buchanan, Pathfinder co-founder and CEO, will lead the unit with "the freedom to do what he's done very well for the last four years," Kaufman said.
Pathfinder's Grandview Heights office also now is the first actual office space for Test Double, remote-first since its 2011 founding.
"It's nice!" said Kaufman, who usually works from Westerville; the company also subsidizes coworking memberships.
Test Double last month marked its ninth consecutive appearance on Columbus Business First's list of the fastest-growing private companies by revenue in Central Ohio.
Fast 50 2023
Pre-acquisition the company was tracking for $24.5 million revenue this year, a dip from $27.7 million in 2022. Annual growth has been 18% to 47% since $12.5 million in 2019.
The two had teamed up on projects when the client needed consulting on the right product to build before starting to code software. Together, the two can accelerate growth as a full-service shop, Kaufman said. Already there's cross-selling to each other's clients.
"There's such a tight collaboration that happens between product and engineering – and neither of us had both of those things," Buchanan said. "Companies are investing in technology, and it's not driving the results they had hoped for. By coming together, we can offer a really strategic and experimental approach.
"We're really focused on making sure businesses are building the right thing. Test Double is focused on making sure they're building it the right way."
Founded four years ago, Pathfinder's customers ranged from startups to Fortune 500 names like Lowe’s, Levi’s, Procter & Gamble and Cardinal Health. Test Double typically had focused more on venture-backed tech startups.
The Ohio Tax Credit Authority this spring awarded Pathfinder an incentive toward adding 40 jobs. Typically the state will amend such deals under new ownership if the growth is still planned.
Test Double converted to an employee stock ownership plan in 2020. Pathfinder employees will start receiving shares at the end of 2024.
"The ESOP was definitely a factor for us (in joining)," Buchanan said. "You don’t have the pressure to make short-term bad decisions for the sake of your investors."
