Our Client – The Vendor
Operating from an island off Queensland with a Canberra office, Intersect Alliance was a niche Security Software business servicing local & international government and corporate clients. InterSect’s flagship product Snare Server provides agents for event monitoring, logging and analysis. These deliver real-time logs across multiple platforms eliminating business risk often associated with other endpoint security monitoring systems. The Snare solution is used by local and international groups including the Commonwealth Treasury, NASA, the US Army, Vodafone and Fujitsu.
Intersect Alliance was highly profitable, making approximately $1M pa. The business had been intentionally kept small, comprising just two Directors and 1 staff member who incorporated lifestyle activities with running the Business (including flying planes and diving in tropical waters).
In 2011 the Directors engaged Johnsons Corporate as a specialist in divesting mid-sized businesses to undertake an international sale campaign on their behalf. Growing market demand for their products & services dictated that the Business expand its operational capacity by increasing staff numbers. Accordingly, the Directors sought an acquirer with complementary skills-sets, an established infrastructure, and the international distribution channel that would provide a platform for expansion. The Directors were eager to continue as employee shareholders retaining up to 20% ownership, however had no desire to manage a growing number of employees.
The International Sales Strategy
For potential acquirers Intersect Alliance represented a great bolt-on opportunity, featuring significant intellectual property; a long-term customer-base of large government & tier-one corporate clients; a globally recognised brand; and a highly competitive product offering positioned in a double-digit growth market.
Johnsons Corporate’s custom research & marketing focused on Security Software Firms in the USA. Related secondary market research targeted software firms within Australia (not security specific) with a turnover of +$5M as well as a shortlist of prospective private equity & financial buyers. Johnsons ran a proactive direct marketing campaign that uncovered 12 qualified, interested parties. Further vetting and negotiations resulted in the selection of a preferred buyer, with Offer and Acceptance secured within 9 weeks of going to market.
ASX-listed Prophecy International (ASX:PRO) acquired the Business in a cash and stock deal. Prophecy’s core business is design & development of software for customer service & business systems. The Buyer came from Johnsons’ research into related secondary markets (providing PRO diversification into security software).