Fabasoft seeks acquisitions with Consus Partner advising – executive

Fabasoft [FRA:FAA ] aims to make a deal a year in the next three years, co-founder, investor and board member Helmut Fallmann said. The company is advised by Joerg Mayer of Frankfurt-based M&A boutique Consus Partner, he added.

Headquartered in Austria and listed in Frankfurt, Fabasoft is a software manufacturer and cloud provider. In the year 2014/2015 (ended on March 31st) it reported EUR 27.6m revenues.

Fabasoft looks at different types of acquisition candidates, the executive said. It would be interested in consulting businesses for the public sector based in Brussels, the UK or in the Netherlands, he added.

To expand its Cloud business Fabasoft would acquire companies with applications/software solutions in the manufacturing, financial and pharmaceutical sectors, Fallmann said. The geographical focus for this division is the German speaking countries with a preference for the German region of Baden Wuerttemberg, he added.

Consulting firms focused on enterprise search, located in Germany Switzerland, Holland and UK could be of interest, the executive said. In this division, the company’s lead product is Mindbreeze InSpire.

The candidates should have revenues in the range of EUR 2m to EUR 7m, Fallmann said. Fabasoft aims to acquire the majority of the candidate and is interested in keeping the previous management/owner involved.

Talks with potential candidates are ongoing, Fallmann said. Ideally, he would like to make a first buy in the cloud business in Germany and in parallel a small acquisition in the UK of a consulting firm for the public sector, he said. The second step would be an acquisition in enterprise search, he added.

The Cloud and the Enterprise Search divisions are growing very fast but the largest revenue generator is now the Enterprise Records Management division, the executive said. The objective is to have the three divisions contributing equally to the total revenues in about two years‘ time, he added.

In the period 2000-2002, after its listing in 1999, Fabasoft made three acquisitions, one in Austria, one in Germany and one in the UK, the executive said. Since then, growth has been organic although the company has been looking to make buys, he said. High transaction prices and unwillingness of the previous owner to stay on board have been among the main reasons for the lack of deals, he said.

A transaction price based on 7x the current EBITDA is reasonable although the price expectations of the sellers are often much higher, the executive said.

Fallmann is now more confident of the possibility to make buys. He said that in recent years Fabasoft’s awareness of the market has increased significantly. Furthermore in the last months the company has been approached by companies looking for buyers and investors. For small businesses it is becoming increasingly difficult to remain independent and face the competition, he said.

Deals can be financed with a mix of sources including cash and share, the executive said. At the end of March, the company had liquidity of EUR 14.6m

Fabasoft’s products enable businesses to manage and store business documents securely, efficiently and uniformly, According to its website the company facilitates the digitalisation of business processes both on site and across companies and borders.

In 2014/2015 the company reported EUR 4.6m EBITDA. Among Fabasoft’s clients in the Enterprise Search division are Lufthansa [ETR:LHA] and Ikea, the executive said.

67% of the company is in the hands of the two founders, board member Leopold Bauernfeind and Fallmann himself, who are not looking to sell their stakes, according to Fallmann. The company has a market capitalization of approximately EUR 40m.

by Laura Larghi, Mergermarket

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