Class Limited (ASX: CL1), Australia’s leading SMSF technology platform, has announced it has acquired corporate compliance and documentation technology company NowInfinity.
NowInfinity operates a market-leading platform that offers the Documentation Suite, Corporate Messenger, Trust Register and Super Comply products. Through its cloud-based platform, NowInfinity works with more than 2,000 accounting firms supporting upwards of 400,000 entities, resulting in reduced costs and streamlined back-office operations. Many of these firms are already customers of Class.
The transaction, which involves the acquisition of all of the shares in NowInfinity 3505 Pty Ltd (NowInfinity), is for a maximum enterprise value of $25m. The purchase consideration will be structured with a $10m upfront cash payment on completion, plus $10m in Class shares, escrowed for two years, to be issued on completion. There are also deferred consideration payments of up to $5m contingent on successful integration that are expected to be paid in April and October 2020. The acquisition will be partly funded by a new $10m debt facility, with the remainder to be funded by existing cash.
The transaction is expected to be EPS accretive in FY21.
“NowInfinity is an attractive opportunity aligned to our Reimagination strategy that allows Class to expand its role across the professional services ecosystem,” Class Chief Executive Officer, Andrew Russell, said. “We are constantly looking for new opportunities to grow and this acquisition is complementary to the Class business in terms of culture, technology and customer base.
“Importantly, it will enable Class to execute on our ambition of providing a broader set of products and services to our customers, which will be further enhanced through stronger integration of both platforms over the medium term. We are excited by this acquisition and welcome the NowInfinity team to Class.”
As part of the Class business, both teams can leverage each other’s skills and capabilities to deliver services that are more integrated, and this acquisition will allow those services to reach more customers. It will also enable the creation of new services and strategies at a larger scale.
NowInfinity’s founder and CEO Amreeta Abbott will continue with the business in the role of Chief Growth Officer – NowInfinity.
“Since 2012, NowInfinity has been deeply passionate and focused on solving pain points for accountants, financial planners, bookkeepers and lawyers through our innovative platform, which has brought to the market a number of industry firsts,” Abbott said.
“We are excited about the opportunity this transaction creates that sees two market leaders leveraging each other’s strengths, enabling NowInfinity’s ability to continue to innovate and grow with our members”.
The NowInfinity business will continue as a standalone operation as the teams work together to integrate the two businesses. There will be no impact on its clients or sales process.
With a firmly established market share of almost 30% and a customer retention rate of 99%, the ongoing strategic growth of the Class business involves identifying new sectors for the product suite to support, including more strategic solutions for the professional services sector.
The NowInfinity investment is the first complete acquisition by Class and represents a key strategic pillar of the company’s Reimagination strategy, which aims to reinforce Class’ position as a technology leader.
“The Class Reimagination strategy aims to develop solutions to solve pain points for accountants and other financial services professionals and how we can build, partner, or acquire capability to solve those issues. This acquisition is a part of that strategy,” Class Chief Strategy Officer, Glenn Poynton, said. “Partnering with businesses also remains a key part of that Reimagination strategy.”
The transaction is expected to be completed by 1 February 2020. Further details on the acquisition will be provided at the half year results announcement on 18 February 2020.