Software Circle Acquires Leading Driving Instructor Software Provider Total Drive
Why we think this is good
The acquisition of Total Drive Software Limited by Software Circle plc is a positive development. The deal is expected to be cash flow generative and earnings enhancing in the first year, with Total Drive being a market-leading provider of software solutions for driving instructors. The consideration of up to £7.5m, which is around 6.8x the current run-rate revenue, suggests a significant revenue opportunity. Additionally, the acquisition is being funded from Software Circle's existing cash reserves, reducing funding risk. While there are some unquantified financials and a lack of a clear timeline for the Earn-out payments, the overall outlook for the deal is positive.
Key Points
- Software Circle plc has acquired the entire issued share capital of Total Drive Software Limited
- Total consideration of up to £7.5m, to be satisfied in cash
- Acquisition expected to be cash flow generative and earnings enhancing in the first year
- Total Drive reported revenue of £0.8m and EBIT of £0.4m for the year ended 30 September 2024
- Current run-rate revenues of approximately £1.1m for Total Drive
Summary
Software Circle plc has acquired the entire issued share capital of Total Drive Software Limited, a provider of an end-to-end software solution for Driving Instructors. The total consideration of up to £7.5m will be satisfied in cash and is structured on a debt free/cash free basis. The acquisition is expected to be cash flow generative and earnings enhancing in the first year after acquisition. Total Drive reported revenue of £0.8m and EBIT of £0.4m for the year ended 30 September 2024, with current run-rate revenues of approximately £1.1m. The acquisition is a positive development for Software Circle, expanding its portfolio of vertical market software businesses.