- PayGroup has executed a term sheet to purchase Astute One for $11 million
- Upon completion, PayGroup shares would be issued at a price of $0.85 per share
- The acquisition is expected to be completed by September 30, 2019
PayGroup has executed a term sheet to purchase Astute One for $11 million.
Astute is a leading software as a service (SaaS) provider to workforce management companies and the corporate sector. It has over 330 clients in Australia and New Zealand.
Similar to PayGroup, Astute operates on an AEE model with implementation fees and recurring subscription revenues, with contract term of three years.
PayGroup is a provider of SaaS payroll solutions. It helps provide clients with payroll and human resources administration services through Business Process Outsourcing (BPO) and SaaS.
The acquisition consideration amount is $11 million. Upon completion, PayGroup shares would be issued at a price of $0.85 per share.
An additional earn-out consideration of up to $1.5 million in PayGroup shares would be payable based on Astute’s revenue and earnings performance in the period to September 30, 2020.
PayGroups Managing Director Mark Samlal is pleased with the proposed acquisition.
“The proposed acquisition of Astute is transformative for PayGroup, and on completion it would deliver an immediate and meaningful uplift to our growing ARR (annual recurring revenue) as well as provide an established client footprint into Australia,” he said.
The acquisition is consistant with PayGroup’s strategic plan to grow ARR and client base.
In the past twelve months since June 2019, Astute generated pro-forma ARR of $6.9 million.
PayGroup’s Chairman Ian Basser said that the acquisition would give a highly established SaaS offering, a significantly increased annual recurring revenue base and growth opportunities.
“For example, 23% per cent of the Australian employment market are currently contingent workers. This has been identified as an important growth market that the combined business will be in a strong position to service,” he said.
The acquisition is expected to be completed by September 30, 2019.
PayGroup expects no changes to the personnel structure of Astute.
PayGroup has gained 16.67 per cent today and is selling shares at $0.70 apiece, at AEST 12:28 pm.