Perth-headquartered Cirrus Networks has acquired NGage Technology Group for $2.5 million.
The deal brings together two high-performers from the CRN Fast50 awards – Cirrus came in at No.3 in 2015, while NGage has appeared every year since its first entry four years ago as the 2013 winner.
The price comprises $1.5 million in cash and $1 million in Cirrus shares to be issued on completion and escrowed for two years. The sellers also have the opportunity to earn an additional $1 million in Cirrus shares, or part thereof, for achieving certain FY17 earnings targets.
Melbourne-based NGage is a reseller and managed service provider that has grown quickly off the back of its partnerships, including early wins with flash vendor Pure Storage. Other key vendors partners include Dell EMC, VMware, Veeam and more.
When NGage first appeared in the CRN Fast50 in 2013, the company turned over $2.3 million in revenue. Four years later, it had grown to ten times that size, generating revenue of $27.7 million in the 2016 financial year. NGage appeared in the CRN Fast50 top 10 every year, a feat no other company has achieved since the awards first launched in 2009.
The company was founded in 2011 by Jarrod Bloomfield and Brent Valle, who brought their respective experiences at Southern Cross Computer Systems and Lenovo to create the award-winning company. Bloomfield will join the executive team at Cirrus, and continue to grow the Melbourne business.
"This is an exciting development in the short successful history of NGage," said Bloomfield. "Being part of the Cirrus Group will accelerate our growth to the IT solutions and managed service sector, where we are a provider of choice in the market through innovation, customer focus and technical excellence.”
The deal marks another acquisition for Cirrus Networks, the publicly listed system integrator founded by executive director Frank Richmond and led by managing director Matt Sullivan.
Richmond told CRN back in 2014 that his company – then still private before its reverse listing via mining shell Liberty Resources – was looking for acquisitions on the east coast.
"I have been talking to Jarrod for nearly a year on and off," Richmond told CRN this morning as the acquisition was announced. "There were cultural synergies, vendor synergies, similar sort of profile. They had grown quite rapidly over the past four to five years. We like the business and we think there is huge upside becoming part of the wider group.
"We both sell similar technology but there are also a number of areas they don't do. They don't do much in the networking space, they don't do much in security. Their managed service offering has only just started. Together we will be much stronger force."
Richmond explained that "the whole purpose of listing the business was to put money in the bank for the expansion to a national business", and that it had taken longer than originally planned to secure the right acquisition target.
Cirrus' shares are currently worth roughly the same price as at the time of the reverse acquisition of Liberty Resources, sitting at 2c in May 2015 and at 2.4c today. The highest price achieved was 5c in December 2015 following the L7 Solutions acquisition.
The acquisition of NGage is the Cirrus' biggest deal since it went public, though not its first.
Cirrus made one of the deals of the year in 2015 when it paid just $500,000 to snap up what was left of L7 Solutions, the company acquired by Amcom for $15 million in 2011.
Cirrus managing director Sullivan had been a founding partner of L7 Solutions before selling it to Amcom, which itself was later acquired by Vocus Communications.
Late last year, Cirrus acquired the remains of Canberra-based reseller Dataflex from VTS IT for $100,000.