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Publicly listed Comms Group has acquired Melbourne-based telecommunication service provider Switched On Australia for $4.3 million.
The deal is expected to bolster Comms Group’s presence and sales in the Melbourne market, contributing at least $3 million in annual revenue and about $1 million in earnings before interest, tax, depreciation and amortisation (EBITDA).
The deal is made up of an upfront consideration of $3.65 million and a deferred consideration of up to $650,000 to be paid 12 months following completion, subject to an adjustment based on revenue achieved in the next 12 months.
Switched On’s services feature voice and data solutions mobile services, business telephony system installation and maintenance, and managed IT support services.
All Switched On staff will join Comms Group, along with founder Leigh Schwarm. The acquisition is expected to be completed at the end of the month, with the integration completed during FY22.
The acquisition adds more than 900 customers and two additional sales staff, which will drive organic growth and cross-selling opportunities, Comms Group told shareholders.
“The acquisition brings a strong SME [small- and medium-sized enterprise] customer base along with additional sales capability in our Melbourne office,” Comms Group CEO and managing director Peter McGrath said.
Comms Group told shareholders it expects full year contribution from acquisitions including Switched On to produce EBITDA of about $5 million, and it will continue to pursue strategic acquisition opportunities.
In April, Comms Group made its foray into the small- to-medium-sized business (SMB) market with the acquisition of Melbourne-based communications service provider Binary Networks.
The deal saw Binary founder Michael Diamond join Comms Group as head of systems and M&A systems integration, through which he will assist with future acquisitions.
In December last year, Comms Group also purchased telecommunications service provider Next Telecom for $12 million.
