CRG and Menlo Acquisitions Set The Stage For An Exciting 2020

• QUIS should finish 2019 with ~$19M in revenue, which includes only two full quarters of CRG revenue.


• QUIS acquired Ottawa-based Corporate Renaissance Group (CRG) on June 1, 2019, for US$14.4M in cash, stock, debt notes, warrants, and contingent payout. CRG provides Microsoft technology and corporate business consulting software solutions. CRG generated revs/EBITDA of ~US$5.8M/US$1.8M in 2018.


• QUIS acquired California-based Menlo Technologies on January 1, 2020, for US$16.2M in cash, stock, debt notes, and contingent payout. Menlo generated revs/EBITDA of US$17.5M/US$1.8M in 2019


• The combined company heading into 2020, will have 300+ employees, with a rev/EBITDA run rate of US$42M/US$5.9M.


• QUIS is executing a targeted Microsoft partner consolidation strategy to fuel the build of the premier Microsoft partner in North America for business solutions and cloud innovation.


• QUIS is the 2019 Microsoft U.S. Partner of the Year – earning this top honor among a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.

• The integration of the Menlo competencies into the QUIS portfolio should drive substantial enterprise growth in the North American market. The combination of CRG and Menlo’s Microsoft Dynamics businesses position QUIS as a leader in the Microsoft Dynamics partner community.

Valuation

On consensus estimates, QUIS is trading at a 2020E EV/Sales of 1.0x versus its North American IT Services comparables trading at 1.8x. On 2020E EV/EBITDA, QUIS is trading at 6.7x vs the comps at 13.1x.

Assuming industry average revenue per employee of US$150K-$200K, QUIS should be able to drive US$45-60M in revenue and $7-10M in EBITDA (with no further acquisitions), which should support a US$100M enterprise value using the industry multiples above.