Applied Financial Technology (“AFT”) introduced its first analytic tools in 1996.  Within a few years, the Company had become one of the fastest-growing providers of intelligent and predictive risk analytics, analysis and data for the mortgage industry.  AFT’s quantitative analytics, which can be fully integrated into a variety of third-party systems, are used by brokers, banks and investors to price, fund, trade and hedge mortgages and mortgage-backed securities. The Company’s models and other products help fixed-income traders, analysts, portfolio managers and risk managers predict, quantify and manage risk associated with prepayment, default, and changes in interest rates.  The company also spawned a sister company: Financial Systems Integrators, Inc. (FSI), a front-end desk-top application that makes use of AFT’s models and other data to allow users to manage portfolios containing a wide range of complex debt securities, including portfolios that contain Collateralized Mortgage Obligations, Asset Backed Securities and Mortgage Backed Securities, as well as more conventional debt instruments.

More than a year prior to engaging M&A, the principal owner approached M&A.  While the principal owner was certain that he could continue to grow revenue at significant rates and remain highly profitable without outside investment, he also wanted some liquidity and was aware that the Company had reached a stage where growth required increased administration and infrastructure.  Based on his very high predicted growth for the coming year and the fact that the Company’s financial controls could benefit by some strengthening to support further discussions (no full-time CFO, no audit) we counseled a careful approach for the then-current year. A year later, with revenue and profit growth on target, a CFO in place and an audit underway, AFT engaged M&A to provide strategic and financial advice.