A Change Of Name
The company may not win any prizes for the choice of name to AdvancedAdvT from Marwyn Acquisition. But it is not as if the old name was great either. However, the stock is set to trade on the LSE today, having raised £130m from investors to create a platform in the software space. At least no one can accuse the group of being under capitalised, or inexperienced.
Computer Software Group
The company has placed 94.8 million shares at £1 each. The Chair is Vin Murria she was formerly the founder and CEO of Computer Software group. Murria was also the former COO of Kewill Systems completing over 40 software acquisitions in these roles. She also served 4 years at HG Capital who are scale investors in software and technology. Ms Murria is subscribing for 17.5 million shares. She is fondly called the “Tech Queen” as all she touches has turned to gold over the last 20 years.
Marwyn Asset Management
Marwyn Asset Management Ltd were founding investors in ACS, one of 11 comparable listed companies launched by them completing 83 subsequent transactions generating £4.6 billion in equity profits. They are also subscribing for £17.5 million shares.
Skin In The Game
Murria, who took the chair on December 31, will have a 13.1% stake and Marwyn AM will have 15.4%. Separately, Marwyn Value Investors Ltd says £13.4 million of the £17.5 million invested by Marwyn AM is attributable to it. Marwyn Value Investors will have an 11.8% interest in the rechristened AdvancedAdvT.
The company focus will be on what it believes to be key drivers in the sector, namely software business with high recurring revenue and a “sticky” customer base. This creates resilient business models with low customer churn. Targeting high free cash flow provides M&A strength and software with extensive cross and up sell opportunities give the potential for scalability with economies of scale. Equally high barriers to entry offer defensive capabilities and founder owned businesses provide consolidation opportunities.
The company will use its experience to organically grow businesses by driving marketing, optimising pricing and cross selling / up selling. It also creates inorganic growth through strategic and bolt-on M&A.
The company will offer a long-term incentive plan which will reward those making a central contribution to the company’s success. Incentive shares allocate 20% in aggregate of the total growth in shareholder value over a 3-7 year period subject to delivering a minimum of 7.5% compound annual preferred return to shareholders
Chair Murria says “We are delighted to see such significant investor support for our strategy to capitalise on the opportunities in the software sector, and we look forward to deploying the capital to buy and grow an attractive platform acquisition,”.
Ground Floor Opportunity
Advanced AdvT Ltd, formerly with the ticker code MAC1, can be regarded as offering a ground floor opportunity, as investors are able to purchase close to where Vin Murrey and the intuitions have. The company is potentially looking at several opportunities at this stage, all of which are private companies. One potential target company is trading circa 7.5 times current earnings, growing at circa 25-30% per annum.
If this deal is completed a quoted fair value would be
· 14 to 15 times PE Ratio
· A further 20% uplift due to growth rate of the company
· A further uplift of 20-30% as a result of Vin Murria’s famous cost equity strategy
This gives a potential valuation of between 270p to 300 pence as opposed to the 120p today. The company’s new ticker is ADVT.
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