The purchase price is $40 million, consisting of $38 million in cash and $2 million in ordinary shares of magicJack. There is also a $2 million earnout tied to the achievement of 2016 revenues., the company said
Broadsmart has a track record of designing, provisioning and delivering complex Unified Communications as a Service (UCaaS) solutions to blue chip corporate customers on a nationwide basis. It also has expertise in servicing enterprises with hundreds to thousands of locations.
The business is highly profitable, generating approximately $13 million in revenues and $4.6 million of EBITDA in 2015, an EBITDA margin of over 35%. For 2016, Broadsmart is forecasting over 20 percent year-over-year growth in sales.
The two founders of Broadsmart, Todd Correll and Tom Tharrington, will remain with the business as CEO and president, respectively, of Broadsmart Global, Inc., a newly formed wholly-owned subsidiary of magicJack VocalTec, Ltd.
MagicJack said the acquisition brings together an optimal mix of resources and capabilities across the two firms. MagicJack said it acquired Broadsmart to diversify beyond its core business into UCaaS, targeting high-end SMB and enterprise customers, and to realize synergies by leveraging magicJack’s proprietary low-cost infrastructure.
Broadsmart will benefit from magicJack resources to deliver additional managed services and solutions to its customers and channel partners.
Q Advisors, a leading global TMT investment banking boutique, acted as exclusive financial advisor to Broadsmart in connection with the transaction.
“We met the Q Advisors team late last year,” said Correll. “After an hour conversation with the team, it was clear that they had a great command of the managed services sector and the relevant players. They listened to our objectives, established the sale price we could expect and identified a projected buyer quickly.
“We look forward to working with Q Advisors in the future.”