Beacon Report from Mar 22 Before this DealMaking Use Of Its War Chest - Quisitive announced that it has signed a definitive agreement to acquire Mazik Global Inc.
Chicago-based Mazik is an independent software vendor that helps companies deploy Microsoft CRM, Cloud and ERP solutions to the healthcare, education and manufacturing industries. - Mazik has partnered with Microsoft engineering for nearly two decades and creates flexible, extensible artificial intelligencedriven solutions. Most notably, the company has developed a valuable set of IP that serves the healthcare, education, and manufacturing industries. In particular, Mazik’s health cloud platform, MazikCare, offers a set of robust healthcare-ready business solutions that enhance end-to-end business operations for medical teams and patients.
- More recently, Mazik extended the MazikCare platform to include its VaccineFlow solution to deliver critical, mass COVID-19 vaccination across the world, with 1 million+ vaccinations administered via the platform already. MazikCare VaccineFlow unifies the process of vaccine distribution and solidifies the relationship between providers, patients, and distributors representing a tremendous growth opportunity.
- Quisitive is paying $7M in cash and issuing 6,254,020 shares. Based on Friday’s close of C$1.47/sh ($1.18/sh), that would imply total consideration of ~14.4M. Mazik’s TTM (ending December) revenues and EBITDA were $10.4M (~25% recurring) and $2.1M (20% EBITDA margins), which implies a takeout valuation of ~1.4x sales and ~6.9x EBITDA. There is also a 3-year earnout. The amount of the earnout is a base maximum of $6M payable in cash, plus an additional incentive amount of $2M based on exceeding recurring revenue growth targets, payable in cash or shares at QUIS’ option. To realize the full performance earnout Mazik revenues will have grown 110% over 3 years and recurring revenues 250%. The deal is expected to close around April 1st .
- Overall, we view this as a positive transaction, which should be immediately accretive and funded with cash on hand (recall the company recently received a strategic investment from FAX Capital of C$20M [i.e. 16M shares at C$1.25/sh]). We estimate proforma cash now stands at ~$21.3M against debt of ~$18.3M.
- Beyond M&A, we believe the next main catalysts will be additional milestone updates on LedgerPay, including a definitive agreement on bank sponsorship, along with Visa/Mastercard certification. We are maintaining our Speculative Buy rating, but increasing our target price to C$1.70 (was C$1.10), which is based on our sum-of-parts valuation.