Technology consultancy Detica is acquiring MA International Limited (ma partners), a privately-owned consulting group specialising in the capital markets sector, for a total consideration of £32.3 million.
The deal comprises of an initial payment of £20.5 million and an additional payment of up to £11.8 million in cash and stock depending on the performance of ma partners in its financial year to 31 March 2007. Detica says the deferred amount will be payable if ma partners achieves its budgeted operating profit of £3.0 million in the year.
The initial payment will be in 1.84 million new Detica shares issued to ma partners, which is valued at £5.3 million on the basis of the stock's closing price on 7 August 2006. The balance will be in cash financed from existing cash resources and new borrowing.
Founded in 1996, MA Partners provides consultancy services to global investment banks, asset managers, private banks, prime brokers, exchanges and retail brokerages. The company employs 130 staff and has operations in Europe and the US with its principal offices in London and New York.
For the year ended 31 March 2006, ma partners reported revenues of £24.4 million and operating profit and profit before tax of £1.5 million. The company also had gross assets of £8.3 million and net assets of £2.5 million.
Detica says the acquisition is part of its strategy to build a substantial presence in the financial services market, where there are significant opportunities driven by increasingly complex financial products and global and local regulatory requirements such as Basel II and MiFiD.
The company bought out London-based Evolution Consulting in November last year, which gave it an initial presence in the capital markets sector. The new acquisition adds a substantial pool of complementary, high-level business consulting skills, says Detica.
The deal is expected to be completed in early September 2006.