TIDMELIX
RNS Number : 2102F
Elixirr International PLC
18 March 2022
ELIXIRR INTERNATIONAL PLC
("Elixirr", the "Company" or the "Group")
Acquisition of iOLAP Incorporated and FY22 Earnings
Elixirr International plc (AIM:ELIX), the established, global
award-winning challenger consultancy, is pleased to announce the
acquisition of the entire issued share capital of technology and
data firm, iOLAP Incorporated ("iOLAP"), for a maximum total
consideration payable of US$40.0 million (GBP30.4 million) (the
"Acquisition").
The Board is also pleased to update its guidance for the
financial year ending 31 December 2022 ("FY22") to reflect its
current expectation including c.9 months' impact of the
Acquisition. The Board's current expectation is that full year FY22
revenue will be in the range of GBP70 million - GBP75 million with
an Adjusted EBITDA margin in the range of 27-28%.
Highlights
-- iOLAP is a US-headquartered technology services firm with 239
full-time employees specialising in provision of end-to-end data
and advanced analytics services
-- Elixirr's third acquisition since IPO in July 2020 and the
first in the USA, marking another step forward in the Group's
growth strategy
-- The business being acquired recorded revenue in 2021 of
US$22.3 million (GBP16.9 million), normalised adjusted EBITDA of
US$4.2 million (GBP3.2 million) and normalised profit before tax of
US$3.8 million (GBP2.9 million)
-- The initial consideration represents a multiple of 6x 2021 EBITDA
-- The Acquisition brings specialist data and analytics
capabilities, including artificial intelligence (AI) and machine
learning (ML), into Elixirr where there is existing demand for
these services. This will enable Elixirr to form even stronger and
longer-term relationships with its existing clients as they work
together on their toughest business challenges
-- iOLAP generated 94% of its 2021 revenue from US clients with
a similar profile expected this year, resulting in a significant
expansion of Elixirr's US footprint, and delivers work with teams
in the US and Europe
-- The data consulting market is forecast to grow by 32% a year
on average to US$4.2 billion by 2026(1) , meaning this Acquisition
positions Elixirr to maximise its share of that opportunity
-- iOLAP has a very strong reputation in the market - it
outperformed competitors in 93% of the categories measured and
scored by their clients during due diligence, with its main
strengths attributed to technical capability and ability to deliver
proactive insights during client engagements
-- Elixirr has already worked alongside iOLAP on several client
engagements over the past six months, validating the forthcoming
success of this partnership. iOLAP has worked with both Elixirr
consulting clients as well as clients of the other brands within
the Group. Likewise, Elixirr has sold its other brands into current
iOLAP clients. It is a proven relationship where the Group is
particularly excited by the cross-selling opportunity
-- Immediately earnings enhancing
-- Prior to acquisition, certain products were carved out of
iOLAP. All numbers presented in this announcement are reflective of
the acquired ongoing business of iOLAP.
(1)
https://www.industryarc.com/Report/17928/big-data-consulting-market.html
Consideration for the Acquisition
The maximum total consideration payable is US$40.0 million. This
consists of initial cash consideration of US$25.2 million, plus
earn out payments of up to US$14.8 million. The initial cash
consideration will be financed from Elixirr's existing cash
balances, which totalled GBP33.8m at 28 February 2022.
Of the US$25.2 million initial cash consideration, US$14.0
million has been paid to the sellers from Elixirr's existing cash
resources, free of restrictions. The remaining balance of US$11.2
million is subject to a contractual commitment with the sellers to
use the after-tax amount (US$8.5 million) to purchase Ordinary
Shares in Elixirr at a price per share of GBP6.425 by 29 April
2022. The Ordinary Shares will be purchased, at Elixirr's option,
either from the Elixirr International Employee Benefit Trust,
subject to sufficient available supply, or otherwise by way of a
subscription for new Ordinary Shares from Elixirr, or a combination
of both. The balance of this element of the cash consideration
(US$2.7 million) has been paid to the sellers to settle their tax
obligations relating to it.
The remaining consideration is potential earn out payments of
Elixirr Ordinary Shares at the prevailing market price of up to
US$14.8 million, contingent on iOLAP achieving revenue growth and
EBITDA margin growth targets in periods up to 31st December 2024.
This consideration will be satisfied at Elixirr's option to use
either one or a combination of both approaches set out above in
relation to the initial consideration.
The Ordinary Shares purchased pursuant to the Acquisition will
be subject to a one-year lock-in arrangement and limitations on the
Ordinary Shares that each seller can sell in each of the following
three years.
As part of the transaction, iOLAP's largest shareholder has
agreed to sign up to a bonus and commitment agreement through which
he will share a portion of the value of his received consideration
to a further six senior leaders in the firm. The sellers have also
agreed to 3-year restrictive covenant agreements.
Reasons for the Acquisition
iOLAP is a US-based provider of technology solutions, delivering
innovative outcomes with cutting-edge data expertise that brings
efficiency, security, and scale to clients. Its capabilities range
from data science and advanced analytics to modern application
development and AI and ML. The Board believes that combining
Elixirr's deep strategic expertise with the depth of iOLAP's
capabilities presents a unique market opportunity, adding depth to
Elixirr's existing capabilities and enabling the strategy of
acquiring companies with specialism in strategic Board-level
issues.
The combination of Elixirr and iOLAP presents a significant
global opportunity for both companies, with the addition of iOLAP
materially increasing Elixirr's US footprint and team size. Both
firms can work in new industries, due to complementary and additive
client profiles - adding 50+ clients to Elixirr's large and
ever-growing client base and providing access to hundreds of new
clients for iOLAP. Elixirr will also be able to leverage iOLAP's
European delivery team across its global clients, creating further
opportunity to add value to clients and shareholders alike.
In a recent client survey iOLAP was rated 23% higher than their
competition. It outperformed the competition in 93% of the
categories measured, with its main strengths attributed to
technical capability and proactive insights.
iOLAP was co-founded by Chris Jordan (CEO and President), and
together with Chris is currently led by Craig Rich (Managing
Partner) and Don Mettica (Managing Partner). Chris, Craig and Don
will continue to lead the business from Dallas, Texas following the
Acquisition.
Founder & CEO of Elixirr, Stephen Newton said:
"I'm delighted to welcome iOLAP as the latest addition to
Elixirr, one of the most significant growth milestones in our
firm's history.
As organisations continue to embark on digital transformation
and operate in an increasingly customer-centric world, it is
crucial for business leaders to put data at the heart of their
strategy in order to stay ahead. iOLAP's offering in this space,
combined with the scale at which they operate in both the US and
European markets makes this acquisition incredibly exciting.
Combining iOLAP's expertise in data and analytics with Elixirr's
deep strategic and business consulting experience will ensure we
continue to stay at the heart of key boardroom challenges. In iOLAP
we see a group of culturally aligned entrepreneurs, who are driven
by intellectual curiosity and a desire to solve problems for their
clients and I truly believe that our combined proposition offers
something unique in the market.
I can't wait to see what the future holds for Elixirr with the
addition of iOLAP, as we continue in our quest to truly redefine
our industry and be the best consulting firm in the world.
CEO of iOLAP, Chris Jordan said:
"After growing significantly over the last few years, we were
looking for a model to ensure we maintain momentum and Elixirr is
the perfect partner for this. Combining our technical expertise
with Elixirr's strategic competencies allows us to satisfy greater
demands from our existing and future client bases, and the
respective client bases our companies hold in different geographies
present significant growth opportunities.
We have already proven the power of our partnership, having
worked together on several client projects over the last six
months, and it's clear that there is an appetite from our clients
for a combined proposition. Joining Elixirr will also provide
opportunities for our employees to further develop their careers
and take on more of an owner mentality, through the various equity
incentive schemes that the firm has in place.
We are excited for the future, and look forward to delivering
more value for our combined client base, as part of Elixirr!"
Elixirr International plc
Stephen Newton, CEO
Graham Busby, CFO
Public and Investor Relations contacts:
Caroline Pitt
investor-relations@elixirr.com
finnCap Ltd (Nominated Adviser & Sole
Broker)
Christopher Raggett, Kate Bannatyne +44 (0) 20 7220
(Corporate Finance) 0500
Alice Lane, Sunila De Silva (ECM)
For further Information please contact:
About Elixirr International plc
Elixirr is an established global award-winning management
consultancy, challenging the larger consultancies by delivering
innovative and bespoke solutions to a repeat, globally-recognised
client base.
Elixirr was founded in 2009, by Stephen Newton, Graham Busby,
Ian Ferguson, Andy Curtis and Mark Goodyear, experienced business
advisors who identified a market opportunity to provide bespoke,
personal services as a 'challenger' to the traditional consultancy
businesses in the market. Elixirr guides its clients to overcome
challenges such as: future-proofing against technological
disruption; development and roll-out of new propositions, products
and services; incubating new businesses; navigating a more complex
and multinational regulatory environment; and project management
and implementation of major change programmes.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
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END
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