Financial Information ($USD)

• Purchase Price: $410 million cash free debt free
• Earnout: Up to $390 million with a target of $210 million
• EV/EBITDA: Approximately 11.3x, based on purchase price plus target earnout and $55 million of EBITDA

 Transaction Details

• Insight Enterprises (NASDAQ: NSIT) today announced it has completed a $410M acquisition of SADA, a leading Google Cloud business and technology partner.
• SADA is a six-time Google Cloud Partner of the year and was named 2023 Google Cloud Partner Global Sales Partner of the Year.
• Founded in 2000, SADA focuses in the healthcare, media, entertainment, retail, manufacturing, and public sectors.
• Strengthens Insight’s position as a leading Solutions Integrator and increases capabilities within the Google Cloud platform.
• Insight is a leader in the Microsoft Azure and Amazon Web Services (AWS) spaces.
• SADA to run as an independent unit and does not anticipate near term cost synergies, adding approximately 850 professionals with over 400 engineers and technical experts.

 martinwolf Analysis

• Accretive: Insight noted the acquisition will be immediately accretive to the Company’s adjusted diluted earnings per share. Insight expects to see a 20-30 cent increase in adjusted diluted EPS just in the month of December, and expects an increase of 55-75 cents in adjusted diluted EPS in 2024.
• Seasonality: SADA’s business is seasonal, with their biggest month in December. Insight says they did not want people taking the 20-30 cents of accretive value in December and annualize that number. SADA typically realizes a negative to low EBITDA during the first half of the year and the second half is where they realize most of their profitability.
• Good Value: This transaction represents a strong financial value play for Insight as SADA historically recognizes $251 million of net revenue, $200 million of gross profit and $50 – $60 million of EBITDA, which Insight anticipates maintaining in the future. Insight anticipates this acquisition will expand total gross margin by over 100 basis points.
• Expanding Capabilities: As a result of this acquisition, Insight will increase their Google Cloud capabilities, with already strong exposure to Microsoft and AWS, SADA will enable Insight to further benefit from the growing trend of multi-cloud adoption, further strengthening their position as the leading solutions integrator.
• Strong Cultural Alignment: Insight has detailed during the course of completing this transaction, they feel SADA’s company culture aligns well with the existing Insight environment. SADA ran a full process for this transaction, and through the auction process and Insight’s pre-existing relationships with SADA, leadership through their GCP partnership, both parties feel that integration will be efficient and successful.
• Insight shares are up $2.62, or 2%, to $154.04 (as of 3 PM ET on 12/1/23)

martinwolf was not the advisor in this transaction.