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Ideagen makes two audit technology acquisitions
27th Oct 2021 09:01
(Sharecast News) - Regulatory compliance software company Ideagen announced the acquisitions of Audit Analytics and Ai XPRT on Wednesday, for total cash of $47m initially.
The AIM-traded firm said the acquisitions would bolster its position as the audit and advisory "system of choice" to the compliance industry, accelerate artificial intelligence (AI) functionality across its portfolio, and increase annual recurring revenues (ARR).
It said Ives Group, trading as Audit Analytics, was established in 2000 to provide accounting, financial, and compliance professionals with regulatory information content.
Audit Analytics last reported revenue of $10.7m, of which more than 99% was recurring, as it counted more than 500 customers including BDO, RSM, PwC, Bloomberg and the SEC.
It also served "thousands of professionals" from accountants to academia, with Ideagen describing Audit Analytics as "highly complementary" to its existing Pentana Audit product suite.
Ideagen said it had agreed to pay an initial cash consideration of $44.9m, with a further earnout of $5m in cash conditional upon achieving ARR of $13m within 24 months.
The board said it expected Audit Analytics to achieve double-digit ARR growth and margins similar to those of the group within 12 months of ownership.
Audit Analytics recorded net income of $0.8m for the year ended 31 December, and had net assets of $3.8m at that date.
Audit Xprt, trading as 'Ai XPRT', meanwhile, provides end-to-end business-to-business (B2B) solutions to the financial (fintech) and regulatory technology (regtech) sectors using its technology, which Ideagen would use to accelerate its own product development roadmap.
It developed a proprietary platform to leverage true AI techniques to automate the auditing of financial disclosure reports, the compliance checking of documents, and document review for due diligence.
The technology would enhance AI capability across Ideagen's cloud service architecture, and was expected to support new functionality across all products in the medium term.
Ideagen said the system was currently in active beta testing with Deloitte, AIA and Barclays, adding that it believed Ai XPRT could reduce compliance costs by up to 90%.
It paid an initial cash consideration of £2m with an additional earnout payment of up to £4m on the second anniversary of completion, subject to certain performance criteria.
Ideagen said it was funding the total acquisition considerations from existing resources.
The acquisition of Audit Analytics was expected to complete in the next three working days after the satisfaction of certain procedural steps, while the acquisition of Ai XPRT was already completed, on 21 October.
"Today's announcement highlights accelerated execution of our mergers and acquisitions growth strategy," said chief executive officer Ben Dorks.
"With the acquisitions of Audit Analytics and Ai XPRT, Ideagen has enhanced its position as the only end-to-end platform for audit and compliance and accelerated the roll-out of our AI capabilities.
"We've also significantly increased our current ARR and, with our integration playbook, will achieve increased visibility of revenues and quality of earnings."
At 0841 BST, shares in Ideagen were up 4.47% at 280.5p.
The AIM-traded firm said the acquisitions would bolster its position as the audit and advisory "system of choice" to the compliance industry, accelerate artificial intelligence (AI) functionality across its portfolio, and increase annual recurring revenues (ARR).
It said Ives Group, trading as Audit Analytics, was established in 2000 to provide accounting, financial, and compliance professionals with regulatory information content.
Audit Analytics last reported revenue of $10.7m, of which more than 99% was recurring, as it counted more than 500 customers including BDO, RSM, PwC, Bloomberg and the SEC.
It also served "thousands of professionals" from accountants to academia, with Ideagen describing Audit Analytics as "highly complementary" to its existing Pentana Audit product suite.
Ideagen said it had agreed to pay an initial cash consideration of $44.9m, with a further earnout of $5m in cash conditional upon achieving ARR of $13m within 24 months.
The board said it expected Audit Analytics to achieve double-digit ARR growth and margins similar to those of the group within 12 months of ownership.
Audit Analytics recorded net income of $0.8m for the year ended 31 December, and had net assets of $3.8m at that date.
Audit Xprt, trading as 'Ai XPRT', meanwhile, provides end-to-end business-to-business (B2B) solutions to the financial (fintech) and regulatory technology (regtech) sectors using its technology, which Ideagen would use to accelerate its own product development roadmap.
It developed a proprietary platform to leverage true AI techniques to automate the auditing of financial disclosure reports, the compliance checking of documents, and document review for due diligence.
The technology would enhance AI capability across Ideagen's cloud service architecture, and was expected to support new functionality across all products in the medium term.
Ideagen said the system was currently in active beta testing with Deloitte, AIA and Barclays, adding that it believed Ai XPRT could reduce compliance costs by up to 90%.
It paid an initial cash consideration of £2m with an additional earnout payment of up to £4m on the second anniversary of completion, subject to certain performance criteria.
Ideagen said it was funding the total acquisition considerations from existing resources.
The acquisition of Audit Analytics was expected to complete in the next three working days after the satisfaction of certain procedural steps, while the acquisition of Ai XPRT was already completed, on 21 October.
"Today's announcement highlights accelerated execution of our mergers and acquisitions growth strategy," said chief executive officer Ben Dorks.
"With the acquisitions of Audit Analytics and Ai XPRT, Ideagen has enhanced its position as the only end-to-end platform for audit and compliance and accelerated the roll-out of our AI capabilities.
"We've also significantly increased our current ARR and, with our integration playbook, will achieve increased visibility of revenues and quality of earnings."
At 0841 BST, shares in Ideagen were up 4.47% at 280.5p.