Care home software business acquired by Grafenia at 29x EBIT

Bristol-based care home management software provider Care Management Systems (CMS) has been acquired by listed SaaS business Grafenia Plc in a deal worth £3.5 million. Grafenia paid a cash consideration of £2.975 million upon completion of the deal, with a deferred consideration of £525,000 payable one year after completion.

The total consideration represents over a 29x multiple of CMS’s earnings before interest and tax of £120,000 for the year to February 28 2022. During that period, CMS reported revenues of £2.5 million and net assets of £1.3 million.

CMS’s software system CareDocs, an in-house platform for care homes, was developed by brothers Jonathan and Kristopher Ann in 2004, with the business subsequently being founded in 2008. The company’s products and services are now licensed to over 800 UK care homes and the firm generates around 95 per cent of its revenue from annual recurring fees.

The Ann brothers resigned from the firm upon completion of the deal, with Jonathan Ann to continue on in a part-time consultancy role for three months to aid the handover of the business and oversee completion of certain projects. Grafenia expects the acquisition to be cash flow generative in a year.

Commenting on the deal, Grafenia’s acting CEO Gavin Cockerill said: “The acquisition of CMS is our third this financial year. It marks another step forwards in our transformation plan. Becoming a serial acquirer of vertical market software businesses. We’re thrilled to add CMS and welcome its team to Grafenia’s growing portfolio."

CMS founder Jonathan Ann added: "When Kristopher and I set about developing the CareDocs solution, we didn't envisage growing a company that would establish itself as a leading supplier to care homes in the UK. We're delighted to hand over the reins to the CMS management team and look forward to seeing the business develop under Grafenia's ownership."

The acquisition of CMS follows Grafenia’s takeovers of e-commerce firm Vertical Plus in September 2022 and document management specialist Watermark Technologies in December 2022. Last month, the company also issued an additional £3.2 million in new bonds to support its ongoing acquisition strategy. This came after the firm sold its manufacturing business in May 2022 in order to focus its growth efforts on software and raised £4.25 million in funding.


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