Regulatory compliance software company Ideagen announced the acquisition of MailManager on Wednesday, for upfront cash of £26.4m plus a deferred conditional earnout payment of up to £2.75m.
The AIM-traded firm described MailManager as an email management solution, designed to help businesses manage emails more efficiently and improve control, collaboration and compliance.
Its software was designed to integrate into the existing IT infrastructure of clients, to file and search critical correspondence so as to benefit productivity, ensure information visibility and accessibility, and to mitigate risk.
MailManager was developed by built environment consultancy Arup a decade ago when that company identified mail management as a critical challenge to the industry.
It had been run as a separate business since 2016, with Ideagen confirming Arup would remain a MailManager customer.
The business had annualised recurring revenues of about £5.1m as at 31 January, with Ideagen expecting MailManager to benefit from its operational leverage, and achieve EBITDA margins comparable to wider group within the first full financial year of ownership.
MailManager’s clients spanned a “broad range” of mid-market to enterprise accounts, with a “particularly strong” footprint in the architecture, engineering and construction sector where Ideagen noted “compelling” cross-sell opportunities.
The UK-based company has a headcount of 60, which Ideagen would integrate to grow the combined business, in particular the collaboration business line.
MailManager recorded revenue of £2.9m and a loss before tax of £0.9m for the year ended 31 March, with net liabilities of £1.8m at that date.
The earnout would be payable on above-20% recurring revenue growth over the next 14 months to 31 March 2023.
Ideagen said the acquisition would be funded from its existing resources, and was the first use of funds from its recent fundraising, with the board describing a “healthy pipeline” of further opportunities.
“We are pleased to announce the acquisition of MailManager, which fits our strategy and acquisition criteria,” said chief executive officer Ben Dorks.
“It complements our existing regulated collaboration product suite, it contributes to our annualised recurring revenue base, and it has a strong presence in key end markets where the group expects to be able to drive cross-group growth.
“Our mission is to help customers effectively navigate highly regulated environments through great software and we look forward to making further complementary acquisitions from our pipeline in due course.”
At 0900 GMT, shares in Ideagen were down 0.37% at 270p.
