If I have a pet hate - and I have many! - it's when a company describes an acquisition as earnings per share accretive when they're paying largely cash in the deal. As long as there are earnings how could it be anything but EPS accretive? Anyway, Austco are doing an EPS accretive deal for Melbourne-based Healthcare reseller Teknocorp.
Including likely earnouts they will pay $3.85m to purchase $9m in revenue and $1.1m in EBITDA. The EBITDA multiple of 3.5x seems reasonable even in these austere markets, although they're to some extent cannibalizing their own sales given that a significant but undisclosed proportion of Teknocorp's sales are Austco products. Also a reseller is inevitably going to have a lower quality people-based business model, relative to Austco's proprietary hardware/software model, and so should justify a lower multiple.
In addition to Austco, Teknocorp also partners with Avigalon, Gallagher, inner range and IndigoVision. The rationale would appear to be gaining a greater proportion of the reseller's sales and acquiring a direct sales capacity in Australia. Other regions in which Austco operates already have this capacity.
The deal is expected to complete in early Q1 FY24.
[Held]