Manaccom today announced a $3.5mil acquisition of Star System Solutions - A great little enterprise software business that generates average EBIT earnings of $1.013mil and has an 8 year profitable track record with recurring revenue from large customers e.g BOEING etc that accounts for 49% of total revenue.
The purchase was negotiated on very attractive P/E multiples of around 3.0 and with most of the revenue being generated in $US the aussie dollar exchange rate brings the P/E down well below 3.0 - talking with Mike and Ian at the AGM today they were very happy with the deal and of how much growth and scope there is in the business and they were also very enthusiastic about having their own IP that they can sell .
The deal was very well structured with the $3.45mil purchase being funded as follows : 1. $1.95mil Vendor Financewith repayments based on sales 2. $1.0mil bank finance 3. $0.5mil Cash Reserves - still keeps debt levels very low and at the same time is still of significant size to increase the Groups profitability.
Manaccom seem very keen to take advantage of the opportunities that are presenting themselves as a result of this credit crisis and the way they are financially structuring their deals I wouldn't be at all surprised to see them making further acquisitions .
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A snippet from a recent article on www.cbsmarketwatch.com : The good news? Allmon continues: "We appear to be coming up on the best buying opportunity since 1974 when great small companies were strewn everywhere like golden nuggets just waiting to be plucked. Hang on to your cash as the best opportunity in a generation looms on the horizon."
IMHO Manaccom is just one of these golden nuggets !!!
MNL Price at posting:
20.0¢ Sentiment: ST Buy Disclosure: Held
