Elecosoft acquires Vertical Digital in €1.55m deal
One of the core features running through the DNA of Silicon Valley is the ability to 'scale at speed' - developing great technology and then rapidly rolling it out across the world.
Buildtech software developer (89% gross margins) () is on a similar journey, having successfully transitioned to a SaaS business model over the past 2 years (est 75% of its FY23 £28m revenues were recurring).
The next step is to accelerate top line growth by selling its leading project/asset management and visualisation applications to a wider client and geographical base. That said, needs more software, IT and consulting expertise.
Today, the company announced that it had taken another major step forward by acquiring Romanian IT solutions firm VerticalDigitaI for €1.3m (£1.1m) in cash.
VD serves many European and multinational clients such as Lufthansa Technik, PwC, VW Financial Services, Deloitte and Zoopla. Thus offering the enlarged group cross-selling opportunities.
Elsewhere, the transaction will also augment 's ability to service and scale its own expanding customer base, provide new routes to markets, add valuable R&D resource, and reduce client implementation periods.
In terms of the numbers, VD delivered adjusted PBT of €0.3m (c. £0.2m) on turnover of €1.2m (c. £1.0m) in 2023. Thus putting the deal on attractive multiples of 1.1x EV/sales and 5.5x PBT. There is also a €250k earnout payable in 2026 in the event financial targets are achieved.
CEO Jonathan Hunter commenting: "VerticalDigitaI will accelerate our ability to support our customers in solving the challenges they face in delivering their digital transformation strategies. Eleco is now better positioned to provide a broader range of solutions and engage with more of its customers and partners on their strategic technological direction."
FY23 results are due out next Tuesday, 23rd April. House broker Cavendish has a target price of 160p/share.
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