Bristol software business snapped up in £3.5m deal

Gavin Cockerill

A software business in Bristol has been acquired in a deal worth £3.5m.

Manchester-based software services group Grafenia, has made the £3.5m acquisition of Care Management Systems (CMS), a provider of care home management software and systems.

The AIM-listed company said the deal is on a debt free basis and will be settled in cash. It is expected to be cash flow generative and earnings enhancing in the first year after acquisition.

The initial consideration comprises cash of £2.975m to be paid on completion, together with deferred consideration of £525,000 to be paid on the first anniversary of completion.

CMS’s care home management software, CareDocs, was initially developed by brothers Jonathan and Kristopher Ann in 2004 as an in-house solution for use in a care home owned by family members.

Having realised the commercial potential for the CareDocs solution, CMS was founded in 2008 and now licenses its products and services to more than 800 care homes around the UK. Approximately 95 per cent of CMS’s revenues arise from annual recurring fees.

CMS has an established management team and currently employs 27 staff.

Jonathan and Kristopher Ann resigned on completion of the transaction, with Jonathan remaining on a part-time consultancy basis for three months to oversee the handover and completion of certain projects.

The unaudited financial statements for CMS for the year ended February 28, 2022 reported revenue of £2.45m, EBIT of £120,000 and closing net assets of £1.3m.

Grafenia said CMS meets its acquisition criteria by being a software business and having a prominent position in its vertical market. Delivering solutions that generate revenues of a recurring nature.

Gavin Cockerill, acting chief executive of Grafenia, said: “The acquisition of CMS is our third this financial year.

“It marks another step forwards in our transformation plan. Becoming a serial acquirer of Vertical Market Software businesses. We’re thrilled to add CMS and welcome its team to Grafenia’s growing portfolio.”

Jonathan Ann said: “When Kristopher and I set about developing the CareDocs solution we didn’t envisage growing a company that would establish itself as a leading supplier to care homes in the UK.

“We are delighted to hand over the reins to the CMS management team and look forward to seeing the business develop under Grafenia’s ownership.”

Last month Grafenia announced a £3.2m bond issue to accelerate its acquisitions of software businesses. The group is transitioning from a print services to a software group.