Sydney-based cyber security firm Pure Hacking has been acquired by IT consultancy PS&C for an initial $8.3 million, and a potential total of up to $16.5 million.
Pure Hacking will join fellow infosec firms Securus Global and HackLabs under the PS&C umbrella, which was formed in November last year as a result of the merger of five companies. It floated on the ASX soon after.
PS&C (People, Security and Communications) also includes Melbourne-based SAP integrator Systems and People, Allcom Networks, and Allcom Consulting, alongside the three security firms.
The company will make the Pure Hacking acquisition through two payments - an initial $8.3 million, paid half in cash and half in shares; and a second payment of 5.5 times Pure Hacking’s earnings for its 2015 financial year.
PS&C expects the firm's FY2015 result to come in at between $2.5 million and $3 million, which would bring the second payment to between $13.75 million and $16.5 million, less the initial $8.3 million.
The overall purchase price will therefore sit between $13.75 million and $16.5 million.
Ten year-old Pure Hacking brought in around $2.1 million in earnings in the fiscal year 2014.
PS&C managing director Kevin McLaine told iTnews the company was looking to acquire a greater share of the “high growth and high margin” cyber security sector in order to create a high franchise value business.
“We are very bullish about the sector and we think there’s a lot of opportunity, and potentially more acquisition opportunity. We think there are benefits in being bigger and somewhat consolidating the industry in terms of economies of scale. That’s our plan," he said.
The company will look to integrate Securus Global, HackLabs and Pure Hacking once the earn-out provisions of the initial agreements expire upon the reporting of Securus and HackLabs’ full year 2016 results.
The integration will be focused on creating a united front rather than as a cost-saving measure, McLaine said.
He also told iTnews he did not expect any of the 35 employees in the security division to be let go as a result.
“I don’t see the integration as losing billable headcount - one of the reasons is there’s a lot of work around, so the advantage of doing the integration is being able to share resources," he said.
“It’s not a cost-saving exercise, it’s really about creating a united front-end to the market.”