Thu, 31 Aug 2023 | BUSINESS SALE
discoverIE Group, a manufacturer and designer of customised electronics to industry, has completed the acquisition of a Newport-based counterpart in a deal featuring a significant earnout. The group has acquired Silver Telecom Limited (Silvertel) for an initial £21 million on a debt free, cash free basis.
The initial consideration, funded from discoverIE’s existing debt facilities, represents a 1.5x multiple of Silvertel’s £13.5 million revenue for the year to February 2023, on which it generated a pre-tax profit of £4.4 million.
However, the deal structure also features an earnout worth up to £23 million, payable subject to Silvertel’s performance over the next four years. If the full earnout is reached, the deal would be valued at £44 million and represent a 3.2x multiple of Silvertel’s most recent revenue.
Silvertel was founded in 1997 and is a manufacturer and designer of high performance Power-over-Ethernet (PoE) modules and products for global industrial connectivity markets, selling in over 70 countries. The company’s operations are closely aligned with discoverIE’s target markets and, post-acquisition, the firm will be integrated into the group’s Magnetics & Controls division, while retaining its distinct brand.
discoverIE CEO Nick Jefferies commented: "The acquisition of Silvertel continues our strategy of building a differentiated, international, growth focused electronics group with strong operating margins. The transaction brings another high quality business with strong alignment to our target markets into DiscoverIE, which is accretive to both underlying earnings and margins."
The deal was initially announced at the beginning of August 2023 and has now closed after receiving approval under the UK National Security & Investment Act 2021.
Earnouts are becoming increasingly popular in M&A recently, amid a widespread rise in valuation gaps
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