Information management software company Ideagen announced the acquisition of Compliance Technology Holdings, trading as ‘CompliSpace’, for an upfront consideration of AUD 105m (£57.7m) and a deferred conditional earnout of up to AUD 5m on Tuesday.
The AIM-traded firm said CompliSpace, founded in 2007, is a growing provider of software-as-a-service (SaaS) governance, risk and compliance (GRC) management products to private and public sector customers.
It said CompliSpace’s principal focus was in the education and social care sectors, where Ideagen saw “globally-compelling” structural growth tailwinds.
CompliSpace serves more than 950 clients in Australia, including more than 730 schools and 135 aged care facilities.
Ideagen said CompliSpace’s proprietary software platform was designed to simplify complex and time-consuming GRC tasks covering policy management, learning and assurance, by mapping a company’s policies and procedures to regulatory obligations, supported by online learning, and automated workflow and reporting.
That, it said, helped customers focus on their core purpose, centralising information in a navigable manner, allowing for better overall governance.
CompliSpace currently had annualised pro forma revenues of about AUD 19m, of which 88% was recurring, and had grown by around 20% over the last 12 months.
The earn-out would be payable depending on 20% per annum recurring revenue growth over the next 24 months, to reach annualised recurring revenue of AUD 23.5m by the second anniversary of acquisition.
Ideagen said it also expected to benefit from operational leverages, such that CompliSpace would achieve EBITDA margins comparable to the group’s in the first full year of ownership to April 2023.
CompliSpace’s chief executive officer David Griffiths would join Ideagen as regional senior-vice president and would, together with his senior leadership team, support the integration and future growth strategy.
The CompliSpace product would be integrated into the wider Ideagen common services architecture, providing future upsell opportunities.
CompliSpace recorded revenue of AUD 15.4m and a loss before tax of AUD 3.6m in the year ended 30 June, with net assets of AUD 11.6m at that date.
The acquisition was being funded from Ideagen’s existing cash and debt resources.
“The acquisition of CompliSpace delivers three clear strategic objectives for Ideagen – a complementary commercial offering with a compelling growth opportunity, a strong footprint in a new geography, and enhances our annualised recurring revenue,” said chief executive officer Ben Dorks.
“We see a significant opportunity to leverage CompliSpace’s Australian footprint with our existing product suite, whilst also expanding its customer base into Europe and North America – in line with our strategy to grow both our geographical and sector expertise.”
At 1004 GMT, shares in Ideagen were up 3.57% at 290p.
