Possible beneficiary of $3.5 trillion M&A boom
​ServicePower provides complete end-to-end software for the scheduling and management of mobilised service professionals. This includes both employees and subcontractors within the repair, maintenance and installation sectors. Ultra-low interest rates and improving corporate balance sheets have helped drive M&A activity to record highs. In July 2014 Oracle snapped up TOA Technologies for an undisclosed sum, while on 30th April private equity house Francisco Partners agreed to buy ClickSoftware (Nasdaq: CKSW) for $438m - equivalent to 3.1x EV/sales. Hypothetically using the same acquisition multiple as has been agreed for CKSW, then this would imply a take-out price for ServicePower of up to 19p/share. Today there was more good news, with the group securing a large contract expansion with a leading global Fire and Security corporation to support 1,000 of its mobile technicians, who install equipment in North America. This follows a strategic partnership signed with Concirrus in May to create one of the first cloud-based 'Internet of Things' solutions for the insurance sector, along with another landmark agreement with Qton Solutions to provide optimised workforce management services for the utility metering industry. We suspect that in light of the above positive newsflow that actual growth is stronger than we had previously anticipated. Consequently our revenue forecasts have been lifted to £13.4m (from £13.25m before) for this year, and further increased by 7% in 2016, and 10% pa thereafter. ServicePower shares at 4p trade on a 2015 EV/sales multiple of only 0.54x - significantly less than its software peers.
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