Ideagen buys Morgan Kai Group for £21m
Ideagen
349.00p
16:14 07/07/22
Information management software supplier Ideagen has acquired the entire issued share capital of Morgan Kai Group for a net consideration of £20.5m, it announced on Friday.
FTSE AIM 100
3,628.91
16:49 25/04/24
FTSE AIM All-Share
753.12
16:50 25/04/24
Software & Computer Services
2,390.57
17:09 25/04/24
The AIM-traded firm described Morgan Kai as a “profitable and growing” software company that developed the internal audit management product 'MKinsight'.
It said MKinsight was used by more than 370 customers across a number of highly regulated vertical markets, including public sector, banking and finance, engineering, healthcare and energy.
With operations in Leeds and Chicago, Morgan Kai currently employed 28 people and provided further infrastructure and customers to support the Group's global growth objective.
More than 77% of customers are international, with 28% based in the United States.
Customers included the UK's National Audit Office, the Federal Reserve, Investec, the New York Stock Exchange, Shell, Bombardier and Blue Cross Blue Shield.
Ideagen said the addition of MKinsight to the group doubled the existing Ideagen Internal Audit business, providing scale, enhanced technology and a strong competitive position.
On a current run rate, Morgan Kai was generating around £5.3m in revenues, with current run rate recurring revenue standing at £3.2m and adjusted run rate EBITDA at £1.7m.
Ideagen said the acquisition was expected to be immediately earnings enhancin, and was expected to contribute £2.0m additional EBITDA for the year to 30 April 2020 following the realisation of £0.3m synergies.
The total net consideration payable was £20.5m in cash, being £22.4m gross consideration payable by Ideagen less cash balances in Morgan Kai of approximately £1.9m.
It said the consideration was being funded from the proceeds of its recent share placing and from existing cash reserves, and would be paid in full on completion.
Morgan Kai was the ‘near term target’ referred to in the company's announcement on 13 September , the board confirmed.
“Morgan Kai is an extremely valuable addition to the Group and is in line with our strategy of acquiring GRC business that have strong IP and growing recurring revenues,” said Ideagen’s executive chairman David Hornsby.
“Internal Audit has represented a core market for Ideagen since the acquisition of Pentana in 2013, the addition of MKinsight to our product portfolio will enhance our scale and capability and provide a strong platform for continued growth globally.”