ReadCloud has acquired Southern Solutions Training for $3.5 million

SYDNEY, AUSTRALIA: ReadCloud Limited announced the acquisition of Southern Solutions Training Services. Established in 2014, Southern Solutions is a Registered Training Organisation (RTO) that predominantly delivers training in Early Childhood Education and Care nationally.

The business has developed strong partnerships with industry and earnt a reputation as a provider of innovative, quality and service focused training.

The acquisition positions ReadCloud in the broader VET market, which has a target audience of 3.9 million students annually and provides a large growth opportunity in an industry with skills shortages and government funding. The Australian childcare sector is estimated to be in need of an additional 16,000 educators.

The training provided by Southern Solutions is delivered under the same compliance oversight regulations as VET-in-Schools with four state government funding contracts.

The owners of the business were attracted to the ReadCloud platform, which they will be adopting to deliver efficiencies and better scaling opportunities. In FY22, Southern Solutions generated sales revenue of $2.0m and delivered EBIT of $364k.

The acquisition consideration is up to $3.15 million for 100% of the issued shares in Southern Solutions Training Services. The upfront payment of $1.35 million includes $975,000 cash and $375,000 in equity (RCL shares) at 20 cents payable on completion.

Deferred payments of up to $1.8 million are based on FY23 and FY24 EBIT performance and paid with 75% cash and 25% shares at the higher of 20 cents or the share price at the time the earn-out targets are being met.

The acquisition will be funded through ReadCloud’s existing cash reserves. The total acquisition cost represents between 3.6x and 4.5x times FY24 EBIT depending on achievement of performance hurdles. Post-acquisition ReadCloud continues to have a strong balance sheet and no debt.

The Share Purchase Agreement is subject to the satisfaction of customary conditions for completion, which are expected to be satisfied in the coming week.

ReadCloud has a track record of successfully acquiring and expanding businesses, having grown Ripponlea Institute (acquired in June 2021), COSAMP (acquired in October 2020) and Australian Institute of Education and Training (acquired in November 2018).

The owners of Southern Solutions, Jayne Marsh and Janina Puttick, will continue to work in the business post completion of the acquisition.

Jayne Marsh, the CEO of Southern Solutions said: “We are very excited to join ReadCloud and to combine our expertise in VET training with ReadCloud’s platform to further accelerate our growth”.

The CEO & Co-Founder of ReadCloud, Lars Lindstrom, said, “This acquisition represents a large growth opportunity for ReadCloud as we are utilising the ReadCloud technology to address the national skills shortage issue in the childcare sector. The industry has a high demand for training of new and existing teachers and strong government focus and funding, and we believe we can assist in solving this issue with the ReadCloud online training platform”.