IT and software development company Ontrac, which has operations in Gateshead, has been acquired in a deal which could be worth up to £19.5m.
The business, which has also has a London office, has been bought by technology provider Tracsis.
In the year to 31 January 2015, Ontrac generated revenue of £7.1m and adjusted pre-tax profit of £2.4m. The business is debt free and has a history of strong organic growth. It employs a workforce of about 30, all of whom will remain with the business post transaction.
The acquisition consideration comprises an initial cash payment of £6m which will be funded out of Tracsis cash reserves and the issue of 197,624 new ordinary shares in Tracsis, coupled with a payment of about £4.6m.
Additional deferred consideration of up to £5m along with performance consideration of up to £3m is payable subject to Ontrac achieving certain financial targets in the two years post acquisition.
Therefore, Tracsis will pay an initial amount of £11.5m and, on the basis that all stretch financial targets are achieved, a maximum total consideration of up to £19.5m.
John McArthur, chief executive of Tracsis, said: “We are delighted to have completed this acquisition which continues our trend of acquiring well run, profitable, niche businesses that are complementary to the broader goals of Tracsis and our customer base.
“We believe there is a great fit with Tracsis in terms of people, culture, products and services and we welcome the Ontrac team to the group.”
Martyn Cuthbert, managing director of Ontrac, added: “We are pleased to come together with Tracsis which is a natural fit for Ontrac. The combined group will have a significant development capability that will benefit our customer base and we look forward to working together on joint opportunities for the enlarged group.”