Sword Aquila, a subsidiary of IT services and risk management software provider Sword Group and created as an acquisition vehicle, is riding to the rescue of UK-based Active Risk with an £11.7m cash purchase of the governance, risk and compliance software provider (GRC), representing a hefty 56.4% premium. Cobalt Corporate Finance acted as an advisor on the deal.
AIM-listed Active Risk has had a rough time and has struggled with new license sales. As a small company selling to large businesses it has also had problems meeting the criteria set by buyers. The net result was that revenue for the year to March 31 2013 was a low £8.2m with pre-tax profits of just £0.5m. With those numbers, the single product company would find it difficult to grow so agreeing to be acquired makes a lot of sense. Sword Group, which is listed on NYSE Euronext Paris and delivered a profit of €6.5m on revenue of €118m in its last full year, provides risk management software and related services so Active Risk is a neat tuck-in purchase which expands its portfolio.
GRC is a volatile area. Some providers are doing well on the back of it such as the UK’s Covalent Software who one of our Little British Battlers (see here), others like Access Intelligence have struggled to find a way. Active Risk has had more difficulty but should find a good home within Sword.