Ottawa software firm Intouch Insight has signed a letter of intent to acquire a North America-based customer experience measurement company in a deal that could be worth up to US$3.6 million.
Intouch Insight said in a news release on Tuesday it will pay US$1.5 million in cash upon closing the transaction. The remaining payments will be in the form of a US$500,000 promissory note repayable over three years with interest and annual cash payments of about US$400,000 per year based on the acquired company’s performance in the four years after the deal is finalized.
Intouch said it would not disclose the company’s name until the deal is completed, citing privacy and competitive reasons. According to the release, the firm generates annual revenues of about US$5 million and has an EBITDA margin of around 15 per cent.
Pending approval of the TSX Venture Exchange, the transaction is expected to close at the beginning of September.
In a statement, Intouch CEO Cameron Watt said the firm will add some “exciting new brands” to his company’s list of customers.
“This transaction will increase our portfolio of clients to whom we can sell our entire suite of products, including our SaaS offerings,” he said. “The vendor’s business appears to be very well-run and a respected organization in the industry. As such, we are looking forward to adding its management team and employee base.”
The latest deal marks the second acquisition in the last two years for Intouch Insight, which specializes in customer survey and data collection software.
The Ottawa firm purchased Georgia-based SeeLevel HX, which provides mystery shopping and audit services to retailers, in a US$3.7-million deal that closed in September 2021. The acquisition helped Intouch generate record revenues of $23.5 million in 2022, a 47 per cent increase over the previous year.
On Tuesday, Watt hinted that more M&A activity could be on the horizon.
“The large investment Intouch has made in technological superiority continues to put us into a leadership position which is difficult to match and makes Intouch an attractive acquirer for owners looking for the right fit for their clients and their employees,” he said.
Intouch shares were up three cents to 38 cents in late-morning trading on the TSX Venture Exchange.