A 'match made in heaven'
Elecosoft is a developer of on-premise and Cloud/SaaS software for the Architectural, Engineering, Construction and Operator (AECO) and digital marketing industries. Its award winning 6D solutions (>100,000 users) cover project planning, estimating, design/CAD, visualisation, site operations and Building Information Management (BIM). BIM acts as the essential lubricant to oil all the connecting parts.M&A is a bit like ‘panning for gold’. Most prospectors lose money, but the successful ones do the homework, know where to look and crucially understand their markets inside out. Similarly, we think Elecosoft - following its ‘transformational’ £2.4m acquisition of BIM (Building Information Modelling) SaaS provider, ICON back in October 2016 - has done it again.
Announcing this morning that it has purchased Shire Systems Limited, a leading UK computerised maintenance management software (CMMS) developer based in Southampton, for £5.1m on a cash/debt free basis. Corresponding to modest 2018 EV/sales, EV/EBIT and PE multiples of circa 2.5x, 6.5x and 8.0x respectively - compared to the sector on 3-5x, 15-25x and 20-30x
In our view, today’s acquisition could ultimately generate synergies many multiples higher than the £5.1m price tag. Plus, we understand Shire has an impressive management team, which should assist the integration process, and longer term help shape the future direction of the business as a whole.
Regarding the numbers, Shire delivered normalised PBT of £0.7m in 2017 on turnover of £1.9m – and YTD is tracking at a slightly higher run-rate of £0.4m and £1.0m for Jan-May’18. Consequently, given this and the newly increased debt facility (from £2m to an £8m, 5 year term loan with Barclays Bank), the Board believes the acquisition “will be earnings enhancing in H2’18â€.
As such, we have upgraded our PBT estimates for this year and next to £3.4m (£3.3m before) and £4.0m (£3.8m) – along with lifting our valuation from 85p to 90p/share.
Accesso Technology Group is engaged in the development and application of ticketing, mobile and eCommerce technologies, and virtual queuing solutions for the attractions and leisure industry. Co.'s solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. Co. primarily has operations or customers in the U.K., the U.S., Canada, Italy, Germany, Australia, Brazil, and Mexico.
Elecosoft is a provider of integrated software applications and related services to international architectural, engineering and construction marketplaces and property management industries. Co. develops its specialist software through its own development teams in Sweden, Germany and the UK. Co. services its customers directly in its primary markets of Sweden, Germany, Benelux, the U.S and the U.K and indirectly to its non-core markets through a network of channel partners.
Intuit helps consumers, small businesses, and the self-employed prosper by delivering financial management and compliance products and services. The company also provides tax products to accounting personnels, who are main partners that help the company serves small business customers. The company organizes its businesses into three reportable segments: Small Business and Self-Employed, which provides QuickBooks financial management solutions to solve financial and compliance problems; Consumer, which includes TurboTax products and services to prepare and file income tax returns; and Strategic Partner, which includes professional tax offerings and serve professional accountants in United States and Canada.
Oracle provides products and services that address enterprise information technology (IT) environments. The company's products and services include applications and infrastructure offerings. The company's cloud and license business engages in the sale, marketing and delivery of its applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings; and its cloud license and on-premise license offerings. The company's hardware business provides Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments.
Proactis Holdings is engaged in the development and sale of business software, installation and related services.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
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