DWS has acquired fellow Australian IT consulting business Projects Assured for AU$30 million, or roughly US$22.18 million.
The deal is valued at roughly 5 to 6 times annual EBITDA (earnings before interest, taxes, depreciation, and amortization). That’s a relatively reasonable price considering some MSPs M&A deals involve valuations closer to 7 or 8 times annual EBITDA. But as the company’s name implies, it sounds like Projects Assured’s revenue mostly involves consulting and project work, rather than the more highly valued MSP recurring revenues.
DWS will fund the deal with cash reserves and debt, with more payments of approximately $13 million payable on the EBITDA performance of Projects Assured over the next five years.
Projects Assured co-founders and joint executive general managers David O’Rourke and Greg Sly will stay with the company for that period under the terms of the deal.
Projects Assured began operations in 2015 and focuses exclusive on customers in Canberra — the capital of Australia. The 100-person company is mainly focused on government contracts. DWS, based in Melbourne, will employ roughly 800 people in total once the deal closes on July 2, 2018.
DWS says it expects Projects Assured revenue in fiscal 2019 to be around AU$35 million to AU$40 million — or roughly US$25.9 million to US$29.6 million.
According to DWS CEO Danny Wallis, the deal is in line with the company’s strategy of diversifying earnings and increasing its exposure to the federal government. “It is also consistent with our stated aim of making earnings accretive acquisitions to supplement the wide-ranging suite of IT and Strategic consulting services already provided by the Group,” he added. “We are pleased to welcome Projects Assured’s experienced and highly skilled workforce into the DWS Group and look forward to supporting David, Greg and the Projects Assured leadership team in the next stage of Projects Assured growth”
DWS made news last year when it lost a bidding war for SMS Management and Technology to its Perth-based rival ASG. The firm was founded in 1991 and specializes in cloud, digital transformation, business intelligence solutions, and system integration, as well as managed services and business strategy.
We’ve seen a spike in M&A activity across Australia in the last 12 months. The deals we’ve noted in the last year include Telstra buying Sydney-based professional and managed services provider VMtech, as ARN reported; and a five-company merger that created an AU$20 million MSP.