Claranova buys all minority interests in Avanquest for €99.9mn

Claranova buys all minority interests in Avanquest for €99.9mn

PARIS, FRANCE: Claranova announced the completion of the buyout of all minority interests in Avanquest, its software publishing division, as announced on August 11, for a total consideration of €99.9 million, including a purchase price adjustment of €1.5 million based on Avanquest’s cash position.

On this basis, the total value of the division’s shares amounted to €155.9 million3.

Pierre Cesarini, CEO of Claranova Group commented: “I am particularly pleased to announce the completion of this transaction which will contribute to simplifying the Group’s capital structure in order to facilitate the market’s understanding of our business portfolio organization.

As owner of 100% of the share capital of the entities comprising the Avanquest division, Claranova will reap the full benefits of the efforts made over the last two years in transitioning to a SaaS4 business model and the new prospects that are now available to the division.

This transaction also offers an opportunity to officially announce the appointment of Eric Gareau as Avanquest’s CEO. After having worked alongside Eric for more than three years to reorganize and reposition the division, I am very confident about the future of our software publishing activities and look forward to this new chapter in Avanquest’s development.”

Since the announcement of Avanquest’s acquisition of the Upclick, Lulu Software, and Adaware businesses in March 2018, the division has undergone a profound strategic transformation from a third-party software reseller to a proprietary subscription-based software publisher and distributor.

While revenue and EBITDA5 have remained stable since FY 2018-2019, the first year the acquired businesses were fully integrated, FY 2020-2021 marked the completion of Avanquest’s transition to a subscription-based business model (SaaS).

As a result, subscription sales now account for 78% of the revenue provided by the three main products developed and distributed by Avanquest (SodaPDF, inPixio, Adaware) compared to 50% in FY 2018-2019. The percentage of recurring revenue (including subscription sales) has accordingly continued to grow and at year-end represented 58% of the division’s total sales for FY 2020-2021, up from 35% in FY 2018-2019.

This has in turn strengthened Avanquest’s EBITDA which rose 54% in FY 2020-2021 to €11 million or 12.4% as a percentage of revenue compared to €7 million and 7.9% respectively in the prior fiscal year.

With a total value for Avanquest’s shares of €155.9 million and an enterprise value of €143.2 million, this transaction has been completed on the basis of terms which are close to the enterprise value of €139.2 million7 referred to in connection with the aborted acquisition in December 2019.

In light of the improvement in Avanquest’s profitability, these terms result in a multiple of approximately x13 last year’s EBITDA, compared to a multiple of approximately x208 proposed in December 2019 and more x43 for a selection of comparable companies9.

This transaction will enable Claranova, as of November 1, 2021, to integrate 100% of the Avanquest’s net income and reaffirms Claranova’s strategic commitment to its software publishing business.

In this context, Mr. Eric Gareau, until now CEO of Avanquest’s proprietary software publishing activities (Own IP), has been appointed CEO of the entire division. Eric joined Claranova in 2018 when it acquired Lulu Software (PDF), where he was CEO. Since joining the Group, he has successfully managed Avanquest’s transition to a subscription-based sales business model. He has more than 25 years of experience in sales and marketing software and Fast Moving Consumer Goods with large international companies.

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