The consideration comprises approximately £400,000 for the estimated net assets, subject to adjustment for the actual value of the net assets on completion, and £700,000 for goodwill. In addition further payments of up to £500,000 will be made based on the pre-tax profit performance of Novacom during the 12 months following completion. Approximately £600,000 of the fixed consideration will be paid on completion, with the remainder to be paid in six equal quarterly payments over a period of 18 months. This acquisition will be earnings enhancing.
Novacom operates within a highly specialised sector of the electronics market, complementary to that of APC, focusing on the defence and communications markets. Novacom has built an excellent reputation in this market sector operating a similar business model to APC, utilising a successful ‘Design In’ approach, following projects from initial design through to production, and providing customers and suppliers with an effective support capability.
In addition, there is some commonality in the customer base that will offer design and cross-selling synergies from the combined product ranges. Novacom has a highly qualified sales team, with a number of individuals having extensive experience gained through senior positions at key RF and microwave organisations over the last 25 years.
In Novacom’s audited results for the year ended 31 December 2007, the 14 strong Lincolnshire based company generated revenue of £2.3 million, with net profit before tax of £220,000.
Mark Robinson, Chief Executive of Advanced Power Components, commented:
“Novacom is an excellent fit with APC’s existing businesses. This acquisition introduces new products and expertise, broadening our offering to customers and addressing new specialist markets. The ‘Design In’ strategy common to both businesses has helped to maintain margins during what has been a difficult period for the electronics distribution industry and we look forward to reporting on the continued growth of the Company during the second half of our financial year.”