Having started to shows signs of organic growth (see IDOX making progress organically), local government software and services provider IDOX is now also looking to push the inorganic growth buttons.
It is expanding its election management capabilities with the acquisition of Londonderry-based electoral voting software provider OPT2VOTE, for up to £3.5m in cash. This includes £2.7m upfront, and a potential further payment of £0.8m in 2013. IDOX is getting hold of a profitable business (£500k in the year ended 30 June, 2011, on revenue of £3.6m) and also £600k cash.
OPT2VOTE provides electronic vote counting systems to the 32 Scottish local authorities as well as managed print services to UK councils. It also offers e-counting, early voting technology and internet and telephone voting technology, so there should be some further opportunities here if and when these services become more widely available.
Key to the deal is OPT2VOTE’s flagship contract for the Scottish local government elections in May 2012, as well as subsequent by-elections in local authorities until 2015. OPT2VOTE is subcontracting to Logica in the £5.2m deal, and will prepare ballot papers for printing and then provide e-counting services on the ballot papers. Logica will provide implementation and support services.
IDOX acquired Strand Electoral Software in 2010 to enter the election market, and with this latest deal it expects to have one-third of the May 2012 UK local council elections including the elections for the Mayor of London and the London Assembly. IDOX’s competitors in the electoral management space are specialists like Xpress Software Solutions and much larger players like Capita and Northgate. M&A to gain market share at this early stage seems a sensible approach for IDOX, but then taking on the bigger players will be a far tougher proposition.