Proventis Partners advises exclusively the shareholders on the sale of ANNOVA Systems GmbH to listed SCISYS ple.

Munich / Dusseldorf, 12 January 2017
The SCISYS group, a global provider of software and IT solutions headquartered in Chippenham, England, acquires 100% of the shares of ANNOVA Systems GmbH, a leading supplier of editorial systems for journalistsin the field of TV and radio with headquarters in Munich, Germany.

Sophisticated transaction structure including earn-outs, milestones, cash/share deal and ring-fencing

The purchase price amounts up to EUR 27.9 million and consists of a downpayment of EUR 11.35 million in cash at closing, as well as earn-out payments of up to EUR16,48 million. The earn-out payments are calculated on the basis of 2016 to 2018 EBITDAs with EBITDA multiples between 8.5 and 10.5, less already made earn-out and downpayments. The earn-out is conditional upon the achievement of specific commercial milestones and can be settled completely in cash or in cash plus up to 24% of total payments in shares of SCISYS plc.

A ring-fencing agreement during the earn phase ensures that the shareholders (at the same time in management roles) can exert the necessary influence on the implementation of their business plan and revenue growth as planned. The share purchase agreement was signed on November 23, 2016, the closing was effective on December 31, 2016.

Strategic transaction background

ANNOVA has demonstrated high sales growth in recent years and faces a further dynamic development, especially after winning the BBC in London as anew major customer recently. This development required ANNOVA to join forces with a strategic partner who can provide the necessary resources in particular with regard to organisation. Due to the high complementarity between the core business of ANNOVA and the media and broadcast area of the SCISYS group the transaction provides high synergy potential through growth opportunities in previously untapped regions. Apart from that innovative services can be created together and the customer base in new and international markets can be expanded faster and better, especially in the growing segment System Automation and Control.

Challenges of the transaction and role of Proventis Partners

As a publicly traded company in the AIM standard on the London Stock Exchange, the holding company of the buyer, SCISYS ple, is subject to a variety of regulations, which had a direct impact on the transaction process. This led to high requirements regarding the due diligence process (commercial, financial, legal, tax) as well as to a complex purchase agreement, that in addition to a comprehensive ring-fencing for the shareholders includes a multi-level earn-out scheme.

Furthermore, in the advanced state of negotiations the unexpected BREXIT decision and the devaluation of the British pound almost created a reverse takeover situation. This potential risk had to be taken into account and cushioned with appropriate contractual arrangements to meet the regulatory requirements in such a case.

In the increasingly complex transaction the team of Proventis Partners (Rainer Wieser, Partner, and Daniel Oberhumer, Senior Associate) was responsible for the smooth running of the entire transaction process: from the hand-picked selection and approach of top decision-makers of potential strategic buyers, to the establishment of the planning and presentation documents including the review of strategic synergies, the evaluation and thorough negotiation of the incoming offers as well as the coordination of the due diligence process. Furthermore, managing the intense and protracted contract negotiations with various teams of lawyers from Germany and England were core tasks by Proventis Partners.

About Annova Systems GmbH

Annova Systems GmbH is a leading provider of software-based news and editorial solutions, in particular for journalists in television and radio stations. More than 50,000 users work daily with ANNOVA’s solutions. The success and good reputation in the market is based on the proprietary OpenMedia software solution that is commonly viewed by users and insiders as the leading solution in this market. The software offers collaborative editing, hence platform independent solutions for collaboration, the creation of trimedial posts (television, radio, online), solutions for research in social networks as well as access to OpenMedia at any time through mobile applications. In addition to a large number of well-known and long standing customers who purchase software licenses, the company generates high recurring sales in the field of services and maintenance. In 2015, Annova Systems generated revenues of EUR7.5 million and an EBIT of EUR1.1 million. In summer 2015, a major customer in the editorial software market could be won with the London-based BBC, which stands for a significant ongoing business volume for at least another 12 years.

About the SCISYS group

Employing nearly 450 staff, SCISYS group is a leading developer of Information and Communications Technology services, e-Business, web and mobile applications and advanced technology solutions. The Company operates in a broad spectrum of market sectors including Media & Broadcast, Space, Government and Defence and Commercial sectors. SCISYS clients are predominantly blue chip and public sector organisations. Customers include the Environment Agency, the Ministry of Defence, Airbus Defence & Space, Arqiva, Vodafone, the European Space Agency, Eumetsat, the BBC, RNLI, AON, Interflora and the National Trust. The Company has UK offices in Chippenham, Bristol, Leicester and Reading and two offices located in Germany.

About Proventis Partners

Proventis Partners is a partner-managed mid-market M&A advisory firm, whose main clients include corporations, family companies and private equity funds. Proventis Partners is active in the sectors of media & technology, AVUCG, logistics, packaging and cleantech & natural resources and has three offices in Zurich, Munich and Hamburg plus a strong partner network in Europe, Asia and the USA.

With now 30 professionals Proventis Partners has successfully completed more than 200 transactions with a total transaction volume of more than EUR 4 billion.