Having long promised a sizeable acquisition ‘to add value for investors’, staff motivation specialist MotivCom has finally delivered with a £15m deal.

The proposed target is Derby-based Zibrant, a provider of venue finding, event management and motivation services to an impressive list of clients. The cash and shares deal is being partly funded by a £3.1m placing priced at 130p.

Like its acquirer, Zibrant has been on a buy-and-build spree in recent years and lifted operating profits 14% to £1.4m on £19.3m sales last year. MotivCom director John Sylvester is convinced that there is more organic growth to come from Zibrant: ‘Their forward visibility is good and, having seen their forward order book, we are confident.’

He says, ‘The things that attracted us to the deal were the strong management, great products and a great client list [including Barclays, Deloitte, Volvo and Pfizer] that has very little overlap with our own and so provides lots of cross-selling and up-selling opportunities.’ Zibrant’s venue-finding business capitalises on the desire of large corporates to consolidate their spending on facilities for events, conferences, training and ad hoc meetings, while event management and production is also a booming business sector that complements MotivCom’s offering.

At the interim, MotivCom achieved an 11% sales advance, with pre-tax profits rising 31% and dividends lifted by 43% to 0.5p. All this growth was organic, from a mix of product developments and new business wins and visibility is high with 88% of budgeted gross profits already booked.

House broker Numis was forecasting earnings of 8.6p for the full year, growing 17% in 2008. The acquisition is reported to be earnings enhancing next year, so expect some revision of these numbers.

Growth Company Investor recommended the shares at 85p last December when the company claimed ambitions to become ‘a £100m company by 2010’. This deal should take the valuation to around half of that target, improving liquidity and putting the shares on more investor radars. Keep buying.

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Motivcom	AIM	£11.65m	40.00p	0.00p
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