Montech (ASX:MOQ) has added two acquisitions, purchasing managed IT services provider, Tetran and SaaS provider, Skoolbag, to help propel the company’s managed services and IP growth strategy.
Montech is spending $9 million on Tetran ($4 million in cash and 142,857,143 in MOQ shares). The deal also entails a performance-based hurdle to enable the owners to earn up to a maximum of 28, 571, 429 shares, scaled if FY16 EBITDA exceeds $1.65 million.
Skoolbag is being purchased for $3 million in cash and the deal also includes performance-based hurdles to enable the owners to earn up to a further 37,500,000 in MOQ shares per year of FY16 and FY17, based on achieving subscription revenue, customer acquisition and EBIT hurdles.
The two acquisitions will bring another 100 staff across to Montech, building employee numbers to 190.
Tetran CEO, Don Francis, will be appointed as a director of Montech.
In a statement to the ASX, Montech Chairman, David Shein, said both acquisitions demonstrate the execution of its strategy in its initial prospectus in being determined to grow both recurring revenue streams and develop and acquire commercialised IP.
“Tetran and Skoolbag will substantially grow our annuity revenues while Skoolbag provides us with a terrific mobile app in a key vertical for MOQ – education,” he said.
Skoolbag’s SaaS solutions primarily targets education, childcare centres and sports clubs. It enables communication with parents or club members through an app. Based on subscription fee revenue model, it has been implemented in more than 2500 institutions across Australia and overseas and counts more than 1 million end users.
Skoolbag will remain as a separate subsidiary under the Montech Group and will benefit from its leadership team experience, corporate financial and marketing resources and MOQdigital’s specialised software development, Cloud, integration expertise and education industry relationships.
MOQdigital has sighted education as its largest industry vertical.
“The Skoolbag acquisition enhances our SaaS capabilities with clear subscription revenue streams as well as the potential to build an education service that has a network effect – meaning that the more people who use it, the more want to because of the value it adds to parents, schools, teachers and students. It is an ideal distribution platform,” Montech CEO, Nicki Page, said.
MOQdigital was attracted to Tetran’s well developed IT 24x7 managed services offering which incorporates a high proportion of recurring revenues.
Tetran CEO, Don Francis, said the blend of culture, leadership, people and customers across the organisation will fuel continued growth,” he said. “This joining together brings significant complementary value to both Tetran and the Montech Group’s staff and customers, we will continue to develop a stronger technology company with global reach.”