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Converge Technology Solutions Corp
Symbol CTS
Shares Issued 214,896,369
Close 2022-03-31 C$ 10.23
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Converge Technology acquires Creative Breakthroughs

2022-04-01 09:37 ET - News Release

Mr. Greg Berard reports

CONVERGE TECHNOLOGY SOLUTIONS CORP. ACQUIRES CREATIVE BREAKTHROUGHS, INC.

Converge Technology Solutions Corp. has acquired cybersecurity solutions provider Creative Breakthroughs Inc. (CBI).

Headquartered in Ferndale, Mich., with presence in regions across the United States, CBI is a service-led team focused on cybersecurity solutions that make the world a safer place. Comprising strategists, former CISOs (chief information security officers) and security experts, CBI identifies and stops would-be breaches before they impact an organization. CBI's main focus areas of threat detection and obstruction lie in helping defend and secure networks and end points, testing and monitoring areas of operational risk, and protecting data. The company's offerings range from security programs to architecture and integration to managed security.

"For over three decades, our clients have been our biggest fans. They've been attracted to our tightly focused offerings with world-class results, and, in an effort to continue meeting their demands in relation to our ability to provide scale, we explored the M&A [merger and acquisition] market for a partner to help us tell a bigger story. By joining Converge, CBI will now be able to take what we do to a much larger audience, integrate with key new partnerships, and have in-depth conversations regarding cloud, analytics and digital infrastructure at the level our clients have come to expect," said Steve Barone, chief executive officer of CBI.

"Converge is excited to have CBI join us as our 30th acquisition," stated Greg Berard, president of Converge. "CBI's knowledge of the security landscape and the strength of their team and solutions will be a major asset for Converge's cybersecurity practice and our ability to continue protecting our clients with the best threat defences for their organizations. CBI expands our security portfolio immediately by bringing more strategic partnerships and a team of strong technical resources across North America that will provide cybersecurity expertise and value for all of our Converge clients."

CBI generated gross revenue of approximately $112-million with an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $9.1-million for the trailing 12-month period ended Jan. 31, 2022. Consideration for the purchase consisted of $47-million (U.S.) plus working capital in excess of $3-million (U.S.) paid in cash at closing and earnout payments of up to $17-million (U.S.) in aggregate, payable over three years. Assuming CBI achieves the minimum level of EBITDA to earn the full earnout, the purchase multiple for the transaction would be approximately 5.1 times EBITDA in the third year following closing. Assuming no earnout payments are made, the purchase multiple would be approximately 6.0 times adjusted EBITDA for the trailing 12-month period ended Jan. 31, 2022, after adjusting for positive working capital. The acquisition is expected to be immediately accretive to Converge, resulting in increased revenue and adjusted EBITDA.

CBI marks the 30th acquisition completed by Converge or its affiliates since October, 2017. Converge's family of companies also includes Corus Group LLC; Northern Micro Inc.; 10084182 Canada Inc., operating as Becker-Carroll; Key Information Systems Inc.; BlueChip Tek Inc.; Lighthouse Computer Systems Inc.; Software Information Systems LLC; Nordisk Systems Inc.; Essex Technology Group Inc.; Datatrend Technologies Inc.; VSS LLC; Solutions PCD Inc.; Unique Digital Inc.; Workgroup Connections Inc.; Vivvo Application Studios Ltd.; Vicom Computer Services Inc.; CarpeDatum LLC; Accudata Systems Inc.; Dasher Technologies Inc.; ExactlyIT Inc.; Rednet; Vicom Infinity Inc.; Infinity Systems Software Inc.; LPA Software Solutions LLC; OPIN Digital Inc; Paragon Development Systems Inc.; Visucom GmbH; 1CRM Systems Corp.; and Interdynamix Systems.

About Converge Technology Solutions Corp.

Converge is a software-enabled IT (information technology) and cloud solutions provider focused on delivering industry-leading solutions and services. Converge's global solution approach delivers advanced analytics, application modernization, cloud, cybersecurity, digital infrastructure and digital workplace offerings to clients across various industries. The company supports these solutions with advisory, implementation and managed services expertise across all major IT vendors in the marketplace. This multifaceted approach enables Converge to address the unique business and technology requirements for all clients in the public and private sectors.

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