Made Tech: The acquisition of Target Applications Limited look savvy

Down 5% at 52.5p (£83m) - Made Tech acquires CX Feedback - Ed S - GREEN =

Digital transformation specialist Made Tech has today announced the acquisition of Target Applications Limited, which trades as CX Feedback. This is a Glasgow-based housing technology provider, serving more than 100 customers across social housing and local government.

Key details of the deal:

• Initial cash consideration of £3.0 million, subject to adjustments, with up to £3.0 million of additional performance-based consideration.

• The acquisition will be fully funded from existing cash reserves.

• Expected to be earnings-enhancing on an adjusted earnings basis in the financial year ending 31 May 2027.

• Target Applications had annual recurring revenue (ARR) of £1.05 million as at 27 October 2026.

“We are delighted to have completed our first acquisition utilising our strong balance sheet to accelerate growth and performance. CX Feedback has many of the qualities we are looking for in an acquisition: a profitable, growing public sector business with recurring revenue and strong customer relationships. It broadens our customer base with more than 100 additional customers across social housing and local government.”

“We know the social housing sector well through our work in central and local government, and this acquisition expands our offering in an area of national importance. The Glasgow team also gives Made Tech its first office in Scotland and will provide a strong growth platform for expanding our work across the UK public sector.”

Ed S’s view:

We had Made Tech on a GREEN rating prior to this deal and while there are obviously some risks around the integration of Target Applications, I don’t see any big reason to downgrade the stock today on the back of this deal.

Attractions of this acquisition include:

• CX Feedback’s recurring revenue model – this will help to boost Made Tech’s recurring revenues.

• Solid growth – Target Applications’ revenue increased by 24% to £1.45 million in 2025 while profit before tax rose by 36% to £0.49 million, based on unaudited management accounts.

• Retained leadership – Target Applications founder and sole shareholder Johnathan Briggs will remain with the business to drive its continued growth.

• Earnings-enhancing – the deal is expected to be earnings-enhancing on an adjusted earnings basis this financial year.

• An established Glasgow team and office – this should strengthen Made Tech's ability to pursue public sector contracts in Scotland.

In terms of the cost of the acquisition, there is some uncertainty here. Because looking beyond the initial cash consideration of £3.0 million, there’s up to £3.0 million of additional performance-based consideration.

It’s worth noting, however, that Made Tech had cash and cash equivalents of £14.5m at the end of May. So, the deal doesn’t look like a stretch.

Zooming out, Made Tech recently posted a strong set of results for the year ended 31 May, with revenue up 27% to £58.9m and PBT up 141% to £4.7m. Its backlog was worth £83.5m.

As for the valuation, the stock is trading on a forward-looking P/E of about 18, taking the consensus EPS forecast for this financial year (ignoring any impact from this deal). That strikes me as quite reasonable considering the growth.

Given the company’s momentum and the valuation, I’m happy to leave the stock on a GREEN rating.