SOCO Corporation Ltd (ASX:SOC) (“Company” or “SOCO”), a leading information technology consultancy, is pleased to advise the acquisition of Axsym Technology Pty Ltd, ACN 640 959 191 (“AxSym”), a Canberra based information technology consultancy with a federal government focus.
- Acquisition is highly complementary, supported by compelling rationale:
- Federal Government client base that doesn’t overlap
- Cross selling revenue synergies – complementing expert services
- Strengthens SOCO’s Canberra footprint for the delivery of both projects and augmentation services
- AxSym’s clients include the Department of Foreign Affairs and Trade, Department of Defence, Australian Criminal Intelligence Commission, and New South Wales Rural Fire Service.
- 4.6x EBITDA multiple based on achievement of deferred consideration milestones over FY24 and FY25
- FY23 unaudited revenue of $8.9m
The AxSym team’s expertise in offering trusted advice to decision-makers across diverse IT architecture domains positions them favourably to influence and shape subsequent delivery engagements.
In addition, AxSym brings with them a rich talent pool of Microsoft specialists that complements SOCO’s team, as well as a growing practice based on ServiceNow. ServiceNow is a cloud-based platform that delivers digital workflow automation across service management, operations, and business functions. This additional technology offering aligns strongly with SOCO’s strategic vision and growth strategy as the target markets share similarities (both government and corporate clients with Microsoft solutions often require support for ServiceNow as a service management platform, and vice versa).
– Simon Forth, SOCO CEO
The purchase price includes $4.3m in cash funded from the company’s available cash on hand, and $3.2m in SOC shares. In addition, there is also the potential for the sellers to receive an earn out payment of up to $3.4m, payable over a two-year period, if certain profit growth targets are achieved.
The transaction is expected to be earnings per share accretive from year one and complete in November 2023, subject to the satisfaction of conditions precedent in the share sale deed (considered to be usual for agreements of this nature). This includes the sellers entering into voluntary escrow agreements for the consideration shares, with 50% of the shares being escrowed for 12 months, and 50% being escrowed for 24 months.
The purchase price, including upfront and deferred consideration, equates to a 4.6 EBITDA multiple calculated by reference to achieving the deferred consideration milestones.
SOCO CEO, Simon Forth said “As a people business, great cultural fit is a mandatory component of our M&A strategy, and AxSym absolutely delivers. We are delighted to welcome the AxSym team into the SOCO family, and to widen our service offerings in Canberra and across the nation.”
AxSym will rebrand to SOCO. The team at AxSym is excited to be joining the SOCO family, and the rebranding is an opportunity to align with and amplify SOCO’s growing reputation as a trusted sovereign provider. By leveraging the increased scale and maturity of SOCO’s people, culture, and marketing functions – the AxSym team can realise operational efficiencies, and crucially, fuel the passion and ambition that has driven their success to date.
AxSym Managing Director Adam Granquist said “The AxSym team is all thrilled to join the SOCO movement. We are excited about the new capabilities and services that we can offer because of the acquisition, and we are very much looking forward to growing our incredibly strong Canberra client base – shoulder to shoulder with our new colleagues as a united team.”
This announcement has been authorised for release by the Board of SOCO Corporation Ltd.
EBITDA is net profit before interest, tax, depreciation, and amortisation.