ShareRoot Ltd (ASX:SRO) has entered into a binding agreement to acquire The Social Science (TSS), a growing and profitable social media and digital marketing agency.
The acquisition of the Melbourne-based agency is highly complementary to ShareRoot’s existing offerings and delivers scale to both businesses.
Noah Abelson, chief executive, said: “This is a very pleasing transaction for ShareRoot.
“It delivers depth of talent to our team, added functionality, more clients in new sectors, and an expanded geographical footprint.
“We will have much deeper and more compelling social and digital media capability.”
A profitable revenue-generating acquisition
TSS is a profitable revenue-generating social media and digital marketing agency.
Its clients are predominantly in the health and life sciences industries.
The acquisition of TSS will add capabilities to produce, promote and protect content across all social and digital media platforms.
READ: ShareRoot experiences high growth rates in active users
ShareRoot is established in the rapidly growing field of user generated content (UGC) marketing.
It provides businesses such as Costco and McDonald’s franchisees a platform to search, legally acquire, organise and measure the effectiveness of user generated marketing campaigns.
Growth synergies for both companies
ShareRoot provides a solid platform to significantly expand TSS’ interest and networks in the US and a number of opportunities have been identified.
Similarly, TSS presents a growth platform and cross-selling channel for ShareRoot’s core UGC platform.
The consolidated offering of both business’ social media and digital marketing offerings will result in ShareRoot being able to market a more comprehensive range of products and access high-value markets.
Co-founded by Victorian business woman of the year
TSS was co-founded by Michelle Gallaher in 2013, who was awarded Victorian Business Woman of the Year and more recently, 2017 Victorian Entrepreneur of the Year.
TSS has a core team of 5 key people operating from its premises in Melbourne and retains a number of freelancers and sources its revenue from a diverse client base.
ShareRoot will pay in cash and shares
Completion of the acquisition is expected to take place within 10 business days after ShareRoot’s capital raise.
Upfront consideration will consist of $350,000 in cash and $216,666 worth of ShareRoot shares.
This represents circa 5 times EBITDA and is in line with standard industry commercial terms.
TSS is entitled to receive further performance shares worth up to $216,666 based on revenue performance milestones.