AgileThought to Merge with SPAC LIV Capital
Software development and IT operations (DevOps) have become increasingly important in the age of cloud computing and mobile devices, and helping organizations streamline those processes is where AgileThought comes in.
The company is now merging with special purpose acquisition company (SPAC) LIV Capital Acquisition Corp (NASDAQ: LIVK) in a deal that values AgileThought at nearly $500 million.
Here’s what tech investors need to know about AgileThought.
A digital transformation consulting firm
Founded in 2004, AgileThought is a consulting firm that specializes in helping enterprise customers implement digital transformations. The company was previously acquired by AN Global in 2019, and is now going public by merging with the SPAC.
AgileThought estimates that the total addressable market for digital transformation services is over $750 billion, which should provide a growth runway for years to come. The digital transformation market comprises over half of the global IT services market, and AgileThought is a pure-play provider that offers an end-to-end solution that can help customers scale quickly.
Since AgileThought is relatively more mature, it has a meaningful existing revenue base of around $164 million in 2020, down from $210 million in 2019. Revenue had dipped last year due to the COVID-19 pandemic and related economic impacts, but sales are expected to rebound to $184 million in 2021.
The company has over 2,200 total employees and expects to generate approximately $77,000 in revenue per billable employee this year. AgileThought has over 270 customers, with over 30 of those clients generating over $1 million in annual revenue. Around 85% of sales come from existing clients.
Most of AgileThought’s customers are based in the United States, while the company also operates in Latin America. Roughly two-thirds of revenue this year will come from U.S. clients, with the remaining third being from Latin American customers. The company says it is positioned to source quality talent from Mexico, where the technology labor pool is growing rapidly.
AgileThought is confident that it can execute on its revenue forecast since its sales pipeline has tripled over the past year and now sits at $351 million. Another way the company plans to support growth is through strategic acquisitions of complementary businesses.
How the deal is structured
The merger assigns AgileThought a post-money equity value of approximately $490 million. LIV Capital has roughly $81 million in cash held in its trust account, and the SPAC has lined up another $42.5 million in PIPE (private investment in public equity) financing.
That will provide the combined company with nearly $124 million in cash, although the bulk of that money ($97.4 million) will be used to pay down existing debt to a private lender. Only $18.7 million of the cash will make its way to AgileThought’s balance sheet after paying transaction fees.
The transaction is expected to close in the third quarter and then the ticker symbol will change to “AGIL.”
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