Dye & Durham Ltd. , a legal-software company which has made a flurry of acquisitions in the past year, has purchased U.K.-based Future Climate Info Ltd. for approximately $94-million as it continues to expand its suite of products for its British customers.
FCI provides its proprietary data to legal professionals involved in property transactions. It builds reports that outline the environmental risks of developing a parcel of land, such as the chance of flooding. The acquisition from owner CLS Property Insights Ltd. bolsters D&D’s software portfolio in Britain, which includes Index PI, a property information database, and Easy Accounts, a legal-accounting software. Last week, it purchased Terrafirma, a Britain-based property-software company for $20-million.
“The acquisition of FCI, along with the recently announced acquisition of Terrafirma, will allow us to drive significant revenue synergies as we provide a far more efficient and integrated offering,” D&D chief executive Matthew Proud said in a press release.
Last week, Mr. Proud indicated that D&D can fund smaller acquisitions, like the Terrafirma deal, through its free cash flow. It has a war chest of more than $1-billion in capital that it can use for larger acquisitions.
D&D has grown rapidly thanks to its recent acquisitions, reporting $68.9-million in revenue in the three months ended March 31, a three-fold increase year-over-year. It saw $38.7-million in adjusted earnings before interest, taxes, depreciation and amortization, exceeding guidance that forecasted $30-million in adjusted EBITDA. The company reported a net loss of $10.6-million which came, in part, from recording $18-million in expenses from $345-million in debt issued in the quarter. The $18-million included $11-million in offering costs and nearly $7-million in unrealized losses as of March 31, because the company will be recording changes in the market value of the debt in each quarter’s financial statements.
Much of D&D’s business is based in Canada and Britain, but it has started to expand into the Australian market. In the most recent quarter, it bought SAI Global’s Australian property division for $87-million and GlobalX for $166-million. According to an Australian media report, D&D is a potential front-runner in an auction to buy a stake in Property Exchange Australia, an electronic exchange for the settlement of property transactions in Australia.
Avjit Kamboj, Dye & Durham’s chief financial officer, said that the company has more firepower to make acquisitions, and plenty of targets.
“We have approximately $500-million of [acquisition] opportunities in the pipeline that our M&A team is currently working very hard on executing,” he said on the company’s earnings call last week.
The company, which has more than 50,000 clients, forecasts $200-million in adjusted EBITDA for 2022, and has set $1-billion in adjusted EBITDA as an eventual target in what it calls its Build to a Billion strategy. It saw $36.7-million in adjusted EBITDA in 2020.
D&D’s strategy is to buy software companies with few competitors and high switching costs for its customers. D&D then raises prices, which its customers pass on to their clients. Passing on fees “reduces the likelihood that customers seek out new vendors once the solutions have been implemented, regardless of cost,” the company stated in a prospectus last year.
In December, D&D acquired DoProcess, Canada’s largest provider of real estate practice-management software, for $530-million. It quickly raised prices on its conveyancing software by more than 400 per cent, to $129 per transaction from $25.
D&D made its debut on the TSX last July in a $150-million IPO that was 13 times oversubscribed.
With a file from David Milstead
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Jaren Kerr