Australian cloud services provider Bulletproof has wasted no time in making use of the AU$4.3 millionit completed in September, announcing that it has signed a non-binding term sheet agreement to acquire an unnamed cloud consulting company.
The Australian-listed cloud company told its shareholders in a statement (PDF) on November 3 that it had signed a non-binding term sheet to acquire the business of a "specialist cloud consulting and professional services company".
The agreement is non-binding, and is subject to further negotiation and execution of legal documentation, the company said.
Bulletproof is unable to reveal the identity of the potential purchase, due to the early stage nature of the negotiations, but said that the proposed deal is an acquisition of the entire business, for a consideration of both cash and shares to a total value of around AU$3.9 million, with the bulk of the consideration on a deferred basis once certain targets are met.
However, the company told shareholders that the target entity has consulting agreements with large enterprise customers, key personnel in a position to add "substantial value", and estimated earnings before interest, tax, depreciation, and amortisation (EBITDA) of around AU$400,000 annually.
In September, Bulletproof successfullyan institutional placement of 14,248,700 ordinary shares in the company, at AU$0.30 per share — raising approximately AU$4.27 million.
At the time, Bulletproof CEO Anthony Woodward said that the extra capital would be used to give the company a stronger balance sheet and enable it to "act decisively" on any acquisition opportunity that presented itself. However, the latest acquisition proposal is not a direct result of the new capital, according to Woodward.
"They're not linked, but the timing is fortuitous," Woodward told ZDNet. "It's a mix of cash and shares, and that's an aspect open to fluidity; It's a deferred deal as well."
Woodward said that rather than proposing an acquisition to bulk up its customer base, the potential purchase would allow Bulletproof to broaden its services offering — a strategy on which the company is currently working.
"We're really just focused on this potential acquisition at the moment," said Woodward. "Our strategy is not so much an acquisition strategy, but more about building our wider services area. We're being asked [by customers] to broaden our consulting base.
"It's really more in the consulting side of the cloud journey. Customers are going on a journey to cloud, and this gives us the ability to help them with that journey. It will enable more customers to move to the cloud more decisively," he said.
Woodward said that although the company would ordinarily not announce an acquisition proposal at such an early stage of negotiations, with the company's annual general meeting just around the corner on November 6, he felt it was appropriate to share the information with investors.
"It's just a term sheet today, and things are likely to change," said Woodward. "But we wanted everyone to be fully informed before the AGM next week."