Jaywing is to acquire York-based marketing software developer Midisi in a deal that will eventually be worth more than £2.5m.
The deal will see integrated agency Jaywing acquire ownership of the IP rights to Midisi’s Decision pay-per-click ad management software. Jaywing currently sells the Decision automisation software to customers under licence.
Initial consideration for the acquisition deal is £400,000, to be paid from Jaywing’s existing cash resources, plus excess cash of £845,230. Further fixed payments totalling £1.4m will be paid at six-monthly intervals over 42 months, plus an additional performance-related earn-out payable at six-monthly intervals between months 13 and 49, funded out of planned cashflows generated from Decision revenues.
Andrew Fryatt, Jaywing chief executive, said: “The acquisition will be earnings-enhancing from the outset, with the removal of the existing licence fee arrangement, and offers huge potential for accelerating growth over the next few years.”
Midisi generated profit before tax of and £146,411 for the financial year to April 30, 2022. Its gross assets are valued at just under £1m.
Jaywing currently generates annual revenues of around £460,000 from Decison, with 50 per cent of this payable to Midisi under the licence arrangement.