Elixirr acquires Hypothesis Group in $45m deal

Elixirr International announced the acquisition of Hypothesis Group, a US-based insights and strategy firm, for a maximum consideration of $45m on Monday.

The AIM-traded firm said the acquisition was expected to enhance its capabilities in research, strategic insights, and design, providing complementary services to its existing offerings in strategy, digital, data, AI, and innovation.

It said the acquisition was part of its broader programmatic acquisition strategy, marking its sixth acquisition since its initial public offering in 2020, and its fourth in the US.

Hypothesis, which Elixirr said has a strong client base including five of the ‘Magnificent Seven’ mega-cap technology companies, recorded $28.1m in revenue and $5.1m in EBITDA over the 12 months to August.

Elixirr said it expected the transaction to be immediately earnings-enhancing, adding that it saw significant cross-sell opportunities with Hypothesis’ Fortune 500 clients.

The acquisition was valued at an initial EV-EBITDA multiple of 7.3x, rising to 8.8x if all deferred consideration was paid.

Hypothesis chief executive Maria Vallis would join Elixirr as a partner, with incentives aligned to the growth of Hypothesis’ revenue and EBITDA over the next three years.

Elixirr updated its 2024 revenue guidance to a range of £108m to £111m, maintaining an adjusted EBITDA margin of 27% to 29%.

The firm said it planned to use a portion of its existing cash balances and revolving credit facility to finance the acquisition.

“We first met the Hypothesis team about 18 months ago, and the opportunity to join forces has consistently excited us ever since those very first discussions,” said Elixirr founder and chief executive officer Stephen Newton.

“With our challenger DNA and focus on high performance, both Elixirr and Hypothesis are premium brands that work with premium clients.

“The acquisition will further solidify the strong reputation we've been building and bring rigour to our research and insights offering. We're excited to welcome Maria Vallis to the partner team as we accelerate our growth in the US.”

Newton said her reputation - trusted by a “high calibre” of clients across additive and complementary industries - would make her a great addition to the team.

“Maria and Hypothesis' expertise will help us solidify the strong reputation we've been building in the US market, which remains a key priority for us.”

At 1251 BST, shares in Elixirr International were up 3.31% at 718p.

Reporting by Josh White for Sharecast.com.