In March this year magicJack VocalTec Ltd. (NASDAQ: CALL), a leader in providing voice-over-Internet cloud-based communication solutions, acquired North American Telecommunications Corp. d/b/a Broadsmart in a deal worth $40 million. Broadsmart acquisiton consists of $38 million in cash, $2 million in ordinary shares of magicJack and a $2-million earnout if Broadsmart reaches $15.6 million in 2016 revenue.
The deal also includes $500,000 in stocks at the time of the closing for Broadsmart’s founders Todd Correll and Tom Tharrington, who will remain with Broadsmart as CEO and President respectively. A half of these stocks will vest in even yearly increments for a 3-year period if Correll and Tharrington stay with the company as of their respective vesting dates and the other half of stocks will vest for the next 3 years if the revenue and EBITDA targets are met. The founders will receive the stocks as an inducement award which is outside the Company’s 2013 Stock Incentive Plan and in compliance with NASDAQ Stock Market Rule 5635(c)(4).
Broadsmart is a single-source provider of cloud-based telecom communications for medium-to-large enterprises with multiple locations across the nation. They design, provision and deliver sophisticated Unified Communications as a Service (UCaaS) solutions of the highest quality and selection.
With $13 million in revenue and $4.6 million in EBITDA, Broadsmart is a highly profitable business. It was acquired for a 3.29 revenue multiple and 10.21 EBITDA multiple.
The buyer, magicJack VocalTec, invented Voice Over Internet Protocol (VoIP) with their pioneering product magicJack, which has sold 11 million by now. The company counts more than 30 patents and multiple awards. The acquisition of Broadsmart will diversify their offer into UCaaS focusing on blue-chip enterprise customers. magicJack’s proprietary low-cost infrastructure will also open up new opportunities for Broadsmart, which will have more resources to provide additional managed services and solutions.
About PierCap Partners:
We are a mergers and acquisitions (M&A) investment bank based in San Diego. M&A is our singular focus. Whether you are thinking of acquiring / selling a business, or taking some chips off the table, we run a well-disciplined process that secures best possible value, minimizes disruption and manages the delicate balance and spirit of collaboration. With over $2 billion in aggregate transaction value and 35+ years of combined experience, our leaders bring operational expertise, an owner’s perspective, and Wall Street solutions to you. Find out more about our focus, services and experience.