Microlise Group, which provides telematics and tracking solutions to fleet operators, is to acquire Enterprise Software Systems (ESS).
Founded in 1997 in the UK, ESS is a leading provider of transportation management systems to enterprise clients such as Culina Group and GXO, helping customers manage their transport operations from order receipt to invoice creation.
ESS is majority founder-owned, has 42 full-time employees and delivered revenues of approximately £5.1m and an adjusted EBITDA of £1m during the 12 months to 31 August 2023, with net assets of £2.6m.
Some 75% of its revenue is recurring, based on long-term contracts with the balance made up of non-recurring set-up fees.
It’s Microlise’s second acquisition deal of the year, following the agreement for Vita Software, and its largest to date.
Under the terms of the deal, Microlise will pay an initial £7.65m cash payment due on completion and a maximum deferred contingent consideration of £0.85m, payable in cash after six months from completion and dependent on any claims.
The sellers will also get a further £3m from existing ESS cash reserves on completion, ensuring Microlise acquires the business on an effective cash- and debt-free basis. The acquisition is expected to immediately enhance earnings on completion.
Microlise CEO Nadeem Raza said: “The acquisition showcases our commitment to strengthening our TMS offering, which we will now be able to provide to businesses of all sizes. ESS immediately increases our recurring revenues, enhances our earnings, and will provide numerous upsell and cross-sell opportunities. We look forward to updating the market on progress in this respect and on the integration of ESS into the wider Group.”
The deal is expected to complete within three months, pending approval by the UK Competition and Markets Authority.
