On 23 February 2022, Ailleron S.A. received an agreement concerning the acquisition by Software Mind of shares in Virtual Software LLC of the USA and Virtual Mind SRL of Argentina, members of the Virtual Mind Group. The acquired companies currently employ approx. 150 highly qualified specialists and generate a combined annual revenue of PLN 35M. The purpose of the investment is i.a. to get closer to clients on the American market and have more access to specialists from North and South America.

“We are consistently implementing our strategy of building a leading global software house. This is the second acquisition this month—several days ago, we signed an agreement with Chmurowisko of Warsaw. In the next few days, we will also finalize the purchase of Code Factory in Romania and Moldova. We are trying to make the most of the favorable conditions and opportunities in terms of attractive acquisitions whenever an entity that is in line with out business model and market priorities comes along. Our goal is to make sure that our services have a global reach and that we have access to a wide market of highly qualified IT specialists. We are boldly expanding outside of Poland. Our advantages include excellent knowledge of the market and a strong partner: the Enterprise Investors fund,” Grzegorz Młynarczyk, the President of Software Mind sp. z o.o. and a Vice President at Ailleron S.A., explains.

“From the very beginning, we have been talking about a dynamic development of Software Mind. We have supported the company with our capital, but also with extensive experience in building organizations through acquisitions—a strategy we successfully implemented in projects such as AVG Technologies or intive. In less than a year from closing the deal, Software Mind acquired five entities on three continents and this shows not only the ambitions, but also the organizational capabilities of the company,” Rafał Bator, a partner at Enterprise Investors who is responsible for the investment in Software Mind, says.

The members of the Virtual Mind Group are companies that have been operating in the IT sector in the USA and in Argentina for 15 years. They have built their position by supplying innovative software, flexible project teams, evolutionary mobile solutions, and innovative UI/UX design. The clients of the acquired companies include Khoros, Naviga, Disco, Trio, Quik!, Reveal Markets, and Gopuff.

The investment opens up possibilities for Software Mind to enter the market of IT specialists in South America and the United States. Important aspect include the fact that a team of software developers can now be built in the same time zone as the east coast of the USA and an opportunity to close the distance to the Silicon Valley. The acquired companies currently employ approx. 150 highly qualified specialists and generate a combined annual revenue of PLN 35M.

“We were looking for companies that would allow us to quickly and efficiently improve our access to highly qualified IT specialists in that region and to get close to our clients, mainly those based in the USA. An important criterion was the location, close to North America, which is a strategic market for us. The entities we look for should have an organizational culture and operating methods that are similar to those of Software Mind. We have analyzed over a dozen of companies and Virtual Mind turned out to be the best choice. It’s an entity that operates not only in Argentina, but also elsewhere in the region, including Brazil and Colombia. However, projects are carried out exclusively for North American clients,” Grzegorz Młynarczyk adds.

The transaction will consist in purchasing from the existing shareholders 70% of the shares in Virtual Software LLC of the USA (indirectly, through a purchase of 70% of the shares in companies that hold shares in Virtual Software LLC) and 100% of the shares in Virtual Mind SRL of Argentina.

The value of the transaction exceeds 10% of Ailleron’s equity, according to the most recent consolidated financial statements of the company (Q3 2021).

On the day of executing the agreement, the existing shareholders will receive 89.1% of the amount due. Another 7.1% will be paid after the execution of the final agreement of purchase of shares in Virtual Mind AR, while the remainder of the remuneration will be a conditional earn-out, payable depending in particular on the financial results of the companies in 2022. Together with the purchase agreement, an agreement regulating the influence of the existing shareholders over the operations of the companies was signed—these shareholders will continue to manage the companies.

“Thanks to the transaction, we have acquired approx. 150 specialists with the experience and knowledge we need. We will be able to quickly and efficiently integrate the new companies with the other teams. Ultimately, we want to expand the team in the new region to 500 people. Companies based in the USA often reach for specialists from Latin America; for them, this is a natural direction when looking for cheaper, but very talented IT employees. As for the acquisitions themselves, we have a strictly common-sense approach: we always want to buy at attractive prices and we can pay more only if the company has very high growth dynamics. We carefully analyze entities prior to acquisition, so that our Group gets maximum benefits, whether in terms of competences or results,” says Rafał Styczeń, the President of Ailleron S.A.

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