Grafenia swoops in €6.20m deal for Irish software services provider

Gavin Cockerill, acting chief executive of Grafenia

Manchester-based software services group, Grafenia, has acquired Dublin property management software services provider, Topfloor Systems, for up to €6.20m in cash, on a debt free/cash free basis.

The acquisition is expected to be cash flow generative and earnings enhancing in the first year after acquisition.

The initial consideration paid at completion was €3.84m, with deferred consideration of €0.96m to be paid on the first anniversary of completion.

Up to a further €1.40m is payable contingent on the achievement of certain targets relating to the future financial performance of Topfloor, known as earn-out.

Topfloor is an established supplier of software services for the property sector with a strong reputation for its cloud-based SaaS solutions Blockman and Letman used by property agents, property owners, landlords and tenants.

Blockman is a service charge, ground rent, client accounting and administration tool providing advanced report and document generation for apartment block and estate managing agents.

Letman is a tenancy administration and client rent accounting tool for property management agents involved in the letting and management of residential properties.

Topfloor has high client retention rates and in excess of 95% of revenues arise from annual recurring fees from its around 300 clients across Ireland and the UK.

Niall Wrafter (CEO) and Cathal Browne (CTO), both shareholders of Topfloor, will remain with the business, entering into new employment contracts and will continue to lead the team of eight staff located in Ireland. Founding shareholder George Murphy is leaving.

The unaudited financial statements for Topfloor for the year ended August 31, 2022, reported revenue of €1.59m, EBIT of €0.37m and closing net assets of €0.98m. The reduction in operating costs associated with the departure of George Murphy and the new, normalised, contractual arrangements for Niall Wrafter and Cathal Browne will lead to an immediate increase to the profitability of Topfloor.

Grafenia said the addition of Topfloor further extends its range of vertical market niche SaaS software companies that generate revenues of a recurring nature.

The €3.84m initial consideration was funded from existing Grafenia cash reserves and the proceeds of the bonds issued by the company announced on January 20, 2023. The €0.96m deferred consideration and earn‐out, if payable, of up to €1.40m, will be satisfied in cash.

Gavin Cockerill , acting CEO of Grafenia, said: “Meeting our acquisition criteria extremely well, Topfloor is a great example of the kind of business our software circle team are actively searching for. We have been very impressed with Niall and Cathal from the outset and are excited to work with them and the Topfloor team in the years ahead.”

Niall Wrafter said: “Having been a shareholder of Topfloor for many years, George was ready to exit whilst Cathal and I have ambitious plans for the business.

“Grafenia can help us achieve those aims and is the ideal home for Topfloor moving forward. We are enthused and energised at the prospect of growing the business and taking it to the next level under Grafenia’s ownership.”

Grafenia was advised on the deal by legal and professional services provider, Gateley Legal.

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