ACQUISITION OPPORTUNITY Hospitality Software Developer

Transcription

1 TEQUITY INC. Tequity provides merger, acquisition, and divestiture services to software and technology companies. As former technology company owners and executives, we understand and appreciate the value of IP and how to find the right strategic fit between companies. Past Transactions ACQUISITION OPPORTUNITY Hospitality Software Developer We are pleased to inform you that Tequity Inc, has been retained as the exclusive advisor in connection with the proposed sale of a privately-owned Hospitality Software Developer. Our client code-name EASTPORT is headquartered in the northeastern United States. The shareholders of EASTPORT believe a strategic buyer will accelerate market success and company growth. They are actively involved in day to day management of the company and are seeking a buyer that can bring the experience, resources and synergies needed to give the company a leadership position in a very fragmented market. They are committed to ensuring post-transaction success and willing to remain involved to whatever degree and timeline the buyer may require. Company EASTPORT was founded over 25 years ago to design Point-of-Sale (POS) software for the foodservice industry and currently offers solutions for tableservice, quickservice (QSR), delivery, bars and nightclubs. The company specializes in solutions for independent restaurants and regional chains and sells exclusively through channel. They currently boast a network of 100+ Value Added Resellers (VARs) who provide the top-notch local support that gives EASTPORT a key competitive advantage. The company has enjoyed long-term success in the North American market and has representation in key international markets, as well. Software Suite & Technology EASTPORT s software suite is based on a Microsoft technology stack but since 2002, the company has also been at the forefront of mobile POS. While their software is most frequently installed on fixed touchscreen terminals, it is device independent and works on a variety of mobile devices and tablets, including the Apple ipad and ipod. The software also works with a wide range of specialized POS equipment from Digital Signage to Kitchen Video and Customer Confirmation Displays and interfaces to a host of third party applications: Above store reporting (ex. Avero) Accounting (ex. QuickBooks) Club Management (ex. TAI) Enterprise Management (ex. Aspect) Menu Engineering (ex. MPP) Payment processing (credit cards, smart cards, mobile wallets, and gift cards)

2 Payment processing (credit cards, smart cards, mobile wallets, and gift cards) Payroll (ex. ADP) Property Management (ex. Fidelio/Opera) Scheduling (ex. HotSchedules) After two years of development, EASTPORT is about to release a new cloud-based solution that will be sold on a SAAS business model. The initial release promises to combine the depth of features available in their legacy POS products with the latest mobility platforms including touch screens, tablets and handhelds and the financial stability that comes from recurring revenue solutions based in the cloud. Reseller Channel and Customers EASTPORT sells to and supports a channel of over 100 active resellers who, in turn, have sold and installed over 15,000 site licenses. Over 50% of the restaurants using these licenses are independent tableservice establishments and 85% of these are located within the United States with additional installations in Canada, Mexico, Ireland, Asia Pac, Middle East and South Africa. EASTPORT generates revenue from licenses sold by resellers, a new mandatory maintenance program, web services (gift cards, on-line ordering) and credit card residuals. The cloud option is sold by subscription and will add to the recurring revenue stream. The Market & Growth Plans The characteristics of the restaurant industry are highly attractive and provide significant expansion opportunities for EASTPORT. National Restaurant Association projects $709.2B in restaurant industry sales from more than 1 million restaurants in the United States. Seven in 10 restaurants are single-unit operations and nine in ten have less than 50 employees which is the sweet spot for EASTPORT solutions. The market for hospitality has grown considerably in recent years with fixed touchscreen terminals being replaced by mobile POS systems, an area where EASTPORT excels. The POS terminal market was 36B in 2013 (Transparency Market Research) and it is forecasted to grow at 11.6% CAGR during the period of In a recent poll by Software Advice, the top two reasons for a new POS purchase were to improve efficiency and gain new POS functionality. Rapidly evolving changes in security, payment solutions, mobile devices, the desire to allow Bring Your Own Devices or allow customers to order on their smart-phones, increasing labor costs, and the need to integrate with diverse software and technologies are creating ideal growth opportunities. EASTPORT plans to increase sales with an aggressive dealer recruitment program to establish resellers in areas of North America not currently serviced and recruit resellers seeking cloud-based food service solutions. An expansion beyond North America is something a strategic buyer may wish to consider as the solutions would require

3 something a strategic buyer may wish to consider as the solutions would require minimal change to begin sale into international markets. Our Team The team consists of 31 very experienced in restaurant operations, software and technology professionals with average tenure of 8 years. They provide an enviable level of service to their resellers. The team is organized to provide sales and lead generation assistance to resellers, to train resellers on the optimal way to configure and implement the systems. As restaurants operate 24x7, so too does the support operations of EASTPORT. Financial Information (000 s) F 2016F 2017F Recurring Revenue Recurring Revenue 17% 19% 47% 39% 42% 47% 49% 50% % Total Revenue 3,501 3,801 4,148 4,559 4,724 4,888 5,577 6,314 EASTPORT Highlights 2015 expected Revenue $4.88m 2015 expected EBITDA $1m Financial Highlights Channel EASTPORT has invested $1m to-date in cloud POS development which benefits will accrue to the buyer Consistently profitable and cash flow positive Strong balance sheet with no debt New emphasis on recurring revenue 42% and growing 2014 New software maintenance program grew by 15% 14 resellers grew orders by more than 20% Station licenses increased by 12% Over 100 Resellers 85% USA-based, 15% International Over 15,000 site licenses Over 45,000 POS terminals active Average 5 new resellers per year Target hospitality POS dealerships Robust database built over 20 years for and direct mail campaigns Aggressive use of vendor relationships Top 3 resellers account for 5% of revenue

4 Product Features Capacity to Scale Hospitality focused restaurant solutions Robust back office and reporting POS with a strong focus on table-service Mobile management iphone/ipod, Smart Phones, browser based Mobile payment processing Apple Pay, Android Pay On-line ordering Inventory Gift cards Loyalty programs Video Surveillance EASTPORT has the management skills and supporting teams to accommodate substantial growth The Cloud software solution scales cost-effectively With new established gateway, EASTPORT can increase residual sharing from 30% of its US customers to 100% Shareholder Objectives The restaurant technology market is undergoing a transition with VC backed experiments trying to disrupt the already fragmented market. EASTPORT shareholders recognize that the company has the technology and scalability to rise to a leadership position, however they would benefit from the assistance of a larger organization or management team that has been there, done that already. Ultimately they are working towards a retirement exit however they would like to stay on if desired by the acquirer to assist in a successful transition. EASTPORT will be of Interest to: Active Operating Companies involved in the hospitality (restaurant) market with the ability to leverage the company s channel and evolving technologies needing or having synergistic products to generate cross-selling opportunities wishing leverage the management team wishing to leverage the EASTPORT reseller community and over 15,000 sites Retail or Hospitality Software Developers looking to expand their suite of products and services into the restaurant markets wishing to expand through channel sales seeking to buy a ready for market Cloud enabled solution looking to acquire a trained talent pool Point of Sale Hardware Providers Seeking a ready community of customers and a reseller sales channel

5 Seeking a ready community of customers and a reseller sales channel Payment Processors Looking to lock in a large community of users and their payment transactions International Investors Seeking a solid footprint in the North American market with management, team, channel and customers Should you have any interest in exploring this opportunity, we welcome the chance to speak with you. Replies will be kept in the strictest confidence. For further information contact: Wilf Rapp Director, Client Engagements x102 [email protected] Strategic Mergers & Acquisitions for Technology Companies 15 Allstate Parkway 6th Floor Markham ON L3R 5B4 (416) Click to view this in a browser If you no longer wish to receive these s, please reply to this message with "Unsubscribe" in the subject line or simply click on the following link: Unsubscribe Tequity Inc. 15 Allstate Parkway6th Floor Toronto, ON L3R 5B4 Canada Read the VerticalResponse marketing policy.