Companies that serve the government through contracts often live and die by those contracts, hiring and letting go employees to match the work that comes in.
In May of this year, longtime Air Force contractor Diversified Technical Services Inc. (DTSI) was forced to lay off 137 of its 188-person staff after one particular contract it worked on for decades went to a different company.
“We would have survived,” said Greg Wicketts, who joined DTSI in 2005 after a stint in the Air Force and was promoted to president and chief operating officer in 2016. “But just survived.”
Now, however, the company — founded in Dallas in 1980, moved to El Paso and eventually relocated to San Antonio a decade ago — has found new life, Wicketts said, as a business unit of Irys, a San Antonio tech company that began its own life seven years ago seeking to ease communications between residents and local governments.
Founded by Eduardo Bravo, Albert Gomez and Beto Altamirano in 2017 as CityFlag, Irys acquired DTSI in an all-cash deal announced earlier this week. DTSI will keep its name, its roughly 60 employees and its existing defense sector contracts.
The acquisition can be seen as part of a “silver wave,” said CEO Altamirano, of young companies snapping up aging businesses and infusing them with new life.
“We are entertaining that business model for sure,” he said. “I think it will help us build a big conglomerate, right, of different solutions, services, products. So yes, definitely, I think that’s part of the roadmap for us.”
For a startup, breaking into government and Department of Defense contracting work is very difficult, said Bravo, Irys’ chief operating officer. “In addition to the relationships, you also need past performance,” he said. “The government is not going to do business with you unless you have past performance.”
Irys did score a $1.15 million Air Force Small Business Innovation Research contract in 2020, which allowed it raise additional funds and build a prototype app, but it ultimately did not get deployed.
Leaders with DTSI and Irys met and recognized each others’ complementary strengths a couple of years ago, Bravo said, and began seeking contracts together, with Irys as a subcontractor. In the wake of DTSI’s 2023 layoffs, acquisition talks began.
DTSI brings its decades of relationships and experience to Irys, and Irys’ software-as-a-service products “become a differentiator for us,” said Wicketts, who, along with the rest of DTSI’s executive team, agreed to remain with the company for at least another year. His new title is vice president of operations.
Irys offers DTSI’s customers machine learning- and artificial intelligence-driven products that can help with business intelligence, data analytics and case management. But the products aren’t the only thing Irys had to offer DTSI, Wicketts said.
“It’s really good for us to have these young, energetic guys around,” he said. “And for the younger people here, it all of a sudden gives them a 20-year vision.”
That vision will hopefully include more cybersecurity work at — and potentially a relocation to — Port San Antonio, both Wicketts and Altamirano said. DTSI has done cybersecurity work at the Port for about the last 12 years, Wicketts said.
“There’s a lot of collaboration happening at the Port,” said Altamirano, who sits on the Port’s board of directors but said he would resign if there was a conflict with Irys relocating there. “There are so many different companies doing cybersecurity and military tech.”
Even with 60 new employees joining its existing 10, Irys remains a small business, but for DTSI, that’s a new designation. It’s one “that checks a box” for larger contractors looking for subcontractors, Wicketts said, meaning new opportunities.
Altamirano said he hopes to see other startups in San Antonio consider acquisitions of older companies as a way to fuse experience and existing relationships with innovation and energy.
“I think this could be helpful to other entrepreneurs out there,” he said. “It’s a trend that’s been happening” of older business owners looking to sell and young entrepreneurs looking to buy. “It could be a huge opportunity and impact for our economics here in San Antonio.”
Irys’ first order of business, though, before it grows further through acquisition or organic growth, Altamirano said, “is getting this one right. We need to get this transition right, and then we’ll definitely look into potentially acquiring other companies.”
