The company informed us that they were exploring with TSI India the possibility of TSI India becoming the managed service and technical support partner for TSN's DWX cyber security business. Should a deal as such materialise, it could become important imo for several reasons.
1. It will highlight that the company's focus is to aggressively build TSN's business.
2. They'll be focusing on two specific areas - to build a managed service business for identity and access management. Who better to do business with than with each other. They've had a strong relationship with each other for over a decade. Hopefully their vision and business strategies are aligned.
3. Even if after thorough due diligence TSN decided not to proceed with the TSI India acquisition, TSN could still have their foot in the door with TSI India.
4. The deal would add value to both companies going forward.
There were a few other offerings that TSN highlighted in the announcement above that they are actively pursuing.
Organic and inorganic opportunities in the areas of...
Not only that, but TSN are also seeking new technology partnerships, specifically in threat detection as well as assessing opportunities for geographic expansion.
So to summarise TSN's new Cyber Security business:
* TSN have now acquired a company at an EBITDA multiple of 3.6x with immediate value accretion for shareholders.
* The business has been generating consistent revenue of $9.9 million over the last three years.
* Recurring revenue has come from existing repeat blue chip clients.
* EBITDA margin of 26-28%. EBITDA of $0.8-1.0 million in each of the last three years.
* The business is earnings accretive.
* And most importantly it hasn't cost them humongous dollars.
That's what I call a deal!
And finally, TSN's plan is to implement a number of initiatives to improve current efficiency and effectiveness in sales and delivery to improve revenue and profitability. That's music to my ears.
