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Brisbane's Young Entrepreneur of the Year Steve Scanlan has sold 50 per cent of two of his businesses to one of Australia's leading listed workforce management companies.
People Infrastructure (ASX: PPE) paid Scanlan $2.8 million upfront in cash for 50 per cent of Recon Solutions and Recon Technology, along with $500,000 in PPE shares.
Recon Solutions provides contractors and permanent talent to the information and communication technology industry Recon Technology is a fast-growing provider of IT strategy development, IT project delivery and staffing solutions to the financial services industry.
"Becoming part of the People Infrastructure group will provide Recon with the scale and capital backing needed to drive the next stage of the company's growth," Scanlan says.
"Both companies have strong management and a great culture with a high degree of loyalty among employees, contractors and clients."
Scanlan, CEO and founder of Recon Solutions and co-founder Recon Technology and Adrian Dixon, CEO and co-founder of Recon Technology, will continue in their current roles post-acquisition and also continue to hold a majority of the remaining equity in Recon.
There will also be an opportunity for Scanlan and Dixon to receive a further shareholding in People Infrastructure based on Recon achieving EBITDA for either FY19 or FY20 of $4 million.
People Infrastructure expects its 50 per cent shareholding in Recon to contribute $800,000 in EBITDA for the next 12 months assuming a continuation of current economic conditions.
"The acquisition of a 50% interest in Recon represents a logical extension of our core workforce management business and delivers People Infrastructure a stake in a new platform in the high-growth IT industry. People Infrastructure and Recon are an excellent strategic fit," says People Infrastructure's managing director Declan Sherman.
"Recon Solutions and Recon Executive are well recognized as market leaders in IT recruitment and People Infrastructure look forward to offering their services to existing People Infrastructure clients.
"Recon Technology has emerged as a leading advisor to the financial services sector focused on digital change projects."
People Infrastructure listed on the ASX in November 2017, has a market capitalisation of $93 million, and Shark Tank's Dr Glen Richards is its chairman.
The cash component of the consideration has been funded by People Infrastructure's existing cash reserves. Other than the shares issued to the vendor (which are subject to performance hurdles), no additional equity will be issued to fund the acquisition.
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