Software maker Intouch Insight has revived its plans to acquire an unnamed North American firm after the deal was put on hold early last year due to the pandemic.
Ottawa-based Intouch (TSX-V:INX) said Thursday it has signed a non-binding letter of intent to purchase the assets of the unidentified customer experience measurement company for US$1.6 million in cash plus 1.5 million Intouch shares.
If the acquired firm hits specific earnings targets, the total value of the deal could be in the neighbourhood of US$3.7 million. Pending approval of the TSX Venture Exchange, Intouch says it expects the deal to close by Sept. 1.
Intouch said the firm has annual revenues in the range of US$5 million with a gross margin of 41 per cent, but it would not identify the company for “reasons of competition and privacy.”
Intouch reached an agreement in principle to buy the company in February 2020, but the non-binding terms lapsed after the global economy went into a tailspin as the coronavirus spread.
“Getting this acquisition back on track is a positive signal that business is returning to its pre-pandemic state,” Intouch CEO Cameron Watt said in a statement.
“The vendor’s business has weathered the storm and, like Intouch, is now very close to a full recovery.”
Watt said the acquired firm’s customers include “household name brands,” adding its founder plans to stay on as a full-time member of the Intouch team.
Intouch makes software that helps clients track customer satisfaction as well as collect data on issues such as employee health and safety concerns. Its customers include A&W and Sobeys. The firm posted revenues of $12.8 million in the fiscal year ending Dec. 31, down from $19.3 million in 2019. Intouch blamed the drop in sales on the closure of vast swaths of the North American economy due to the pandemic.
Intouch shares were down 11 cents, or nearly 14 per cent, to 68 cents in mid-afternoon trading on the TSX Venture Exchange.