Jaywing acquisition to enhance agency’s automation and use of AI

Marketing and data science business, Jaywing, has agreed to acquire marketing software development business Midisi.

York-based Midisi owns the intellectual property rights for the ‘Decision’ software Jaywing currently sells under a licence arrangement. The software enables customers to automate pay-per-click advertising management.

The acquisition would enable Sheffield and Leeds-based Jaywing to take full ownership of the intellectual property for Decision, providing a full revenue contribution from Decision sales.

Initial consideration for the acquisition deal is £400,000, to be paid from Jaywing’s existing cash resources, plus excess cash of £845,230.

Further fixed payments totalling £1.4m will be paid at six-monthly intervals over 42 months, plus an additional performance-related earn-out payable at six-monthly intervals between months 13 and 49, funded out of planned cashflows generated from Decision revenues.

Andrew Fryatt, Jaywing chief executive, said: “Digital marketing has now overtaken all other forms of marketing spend in the UK, and this acquisition enables Jaywing to significantly enhance its automation and use of AI, which gives us a strong advantage in this market. 

“The acquisition will be earnings-enhancing from the outset, with the removal of the existing licence fee arrangement, and offers huge potential for accelerating growth over the next few years.”

For its financial year ended 30 April 2022, Midisi generated revenues, EBITDA and profit before tax of £231,849, £149,169 and £146,411 respectively, and as at 30 April 2022, had gross assets of £934,223. 

Following the acquisition, the incremental revenue contributions delivered by Decision are estimated to be at least £5.7m over 42 months, based on planned growth in the client base and enhancements to other existing Jaywing services.

Jaywing currently sells Decision to clients via a licensing arrangement with Midisi, which generates revenues of approximately £460,000 per annum for the company, from just six clients.

Revenues are currently subject to the licence fee of 50% of the gross revenues to Jaywing from Decision, which are payable to Midisi.

After the licence fee, Jaywing currently earns about £230,000 of net revenue from sales of Decision.