Ukrainian outsourcing provider, Archer Software, announces its acquisition by US-based companies

A Ukrainian tech company, Archer Software, with offices in Dnipro, Kyiv, and New York, has announced a deal with American company Cprime. The amount of the deal was not disclosed, but experts estimated that 100% of the company could be valued at $5-8 million.

Parties to the deal

Cprime is a US-based company, which is part of Alten Group since 2014. Alten Group is the world’s leader in engineering and technology consulting. In total, its companies employ 37,200 people, and the turnover is 2.6 billion euros. Cprime specializes in Agile, Atlassian, and DevOps.

Since 2000, Archer Software has implemented 650+ B2B, B2C, and B2G products working with startups and corporate companies in the field of healthcare, automotive, and finance.

According to the company’s management, this transaction will allow obtaining stronger competitive advantages in working with international clients.

Valuation of the company

Officially, the amount of the deal was not disclosed. However, according to estimates of Vitaly Gorovoy, the founder of InSoft Partners, it could be about $5-8 million for 100% of the company. He describes the method of calculating the amount in this way:

“When a western company acquires a software development business, in most cases, the cost of the business is based on EBITDA.

Moreover, the value calculated in the management accounting of local businesses is not final. During due diligence, a buyer is engaged in the so-called “normalization of EBITDA” (the process of adjusting EBITDA for vacations, shareholders’ salaries, etc.).

Based on the results, the obtained figure is multiplied by the agreed multiplier, which strongly depends on the cash-in/cash-out, as well as on the terms and conditions of payments.

In my opinion, the buyer can pay $5-8 million for 100% of Archer Software. However, of course, the figure can vary in both directions, based on the internal situation in the business caused by COVID and the terms of the deal agreed by the parties.”