Zoopla Property Group has conditionally agreed to acquire Property Software Holdings for £75m, in what the the group’s chief executive has branded a “game-changer” for the estate agency market.
The digital media and lead generation platform in charge of Zoopla, uSwitch and PrimeLocation has done the deal as part of a “continued mission to be the most effective partner for UK property professionals”.
It will add “software and CRM, digital marketing and market insight tools and further revenue opportunities”.
Zoopla CEO Alex Chesterman called the acquisition “a game-changer”, combining ZPG’s property marketing solutions with PSG’s property workflow solutions.
Established in 2007, PSG’s software is now used in over 8,000 estate agency branches. For the year ended 31 March 2016, it generated revenues of circa £15.9m, with 84 per cent recurring revenues and a customer retention rate of over 97 per cent.
Post completion, PSG will continue to operate as a standalone platform and brand “with business as usual”, according to the Zoopla statement.
PSG chief executive Mark Goddard will become managing director of the group’s property services division, reporting to ZPG founder and chief executive Alex Chesterman.
The group expects the acquisition to boost earnings in the first full financial year following completion.
Under the deal, £75m will be payable in cash with £47m on completion, £22m coming six months after that and a further £3m payable each of 12 and 24 months after completion.
The transaction will be funded from the group’s existing cash and a £50m extension of the current debt facility it has secured from existing lenders.
Completion is conditional upon either the cancellation of PSG’s existing FCA Consumer Credit License or FCA approval of the change of control of PSG, whichever is the earlier.
The transaction provides an exit for PSG’s institutional backers, LDC - the private equity arm of Lloyds Banking Group - which originally invested in the business in December 2013, along with certain members of the management team, including Mark Goddard, Eduardo Mardell and James Toogood.
Mr Chesterman said: “We will be able to offer UK property professionals an unrivalled proposition supporting them with their software and CRM solutions, digital marketing requirements, market insight tools along with providing them a range of new revenue opportunities through PSG’s MoveIT platform.
Mr Goddard added: “We’ve had a long-standing relationship with the team at ZPG and are incredibly excited to continue our journey as part of their growth and innovation story.”