Emerge Commerce signs deal to acquire Viral Loops

Executive Summary

• Emerge Commerce Ltd. signed a definitive agreement to acquire substantially all assets of Viral Loops, a profitable B2B referral marketing platform, from Wishpond Technologies Ltd.
• The transaction is funded by a $1.8 million non-brokered private placement and existing cash on hand, with total cash consideration of $2.3 million ($2.1 million upfront, $200,000 deferred).
• The acquisition is expected to be immediately accretive to earnings, significantly improving Emerge's consolidated gross margins and adjusted EBITDA through the addition of Viral Loops' high-margin, recurring revenue model.

Key Details

• Acquisition Target: Viral Loops, a B2B referral marketing platform founded in 2016, operating an asset-light, recurring-revenue model with high gross margins.
• Financial Performance of Target (Year ended Dec. 31, 2025):
  • Revenue: $1.3 million.
  • Gross Margins: Approximately 86%.
  • Adjusted EBITDA: $800,000 (approx. 62% margin).
  • Total Assets (at Dec. 31, 2025): Approximately $1.2 million.
  • Deferred Revenue Liability Assumed: Approximately $100,000 (U.S.).
• Transaction Consideration:
  • Cash paid to seller: $2.1 million on closing (subject to adjustments).
  • Deferred cash consideration: $200,000 at the one-year anniversary.
  • Total Consideration: $2.3 million.
  • Valuation Multiple: Approximately 2.9 times 2025 adjusted EBITDA.
• Financing Details:
  • Type: Non-brokered private placement.
  • Units Issued: 18 million units.
  • Price: 10 cents per unit.
  • Gross Proceeds: $1.8 million.
  • Warrant Terms: Each unit includes one-half of one common share purchase warrant; exercisable for 24 months at $0.15 per share.
  • Use of Proceeds: Allocation toward the purchase price of Viral Loops; balance to be satisfied with funds on hand.
  • Finder’s Fees: Up to 6% cash commission and up to 6% finder warrants (exercisable at $0.10/share for 24 months).
• Strategic Rationale & Pro Forma Impact:
  • Portfolio Synergies: Viral Loops technology to be deployed across Emerge’s D2C grocery and golf verticals.
  • Margin Improvement: Viral Loops gross margin (86%) vs. Emerge’s reported average (36% YTD 2025).
  • EBITDA Impact: Pro forma 2025 adjusted EBITDA would have been $2.2 million (approx. 52% increase).
  • Return on Invested Capital (ROIC): Expected to exceed 25% in Year 1.
  • Seasonality: Viral Loops’ recurring revenue expected to reduce seasonality inherent in Emerge’s consumer-facing businesses.
• Closing Conditions:
  • Expected to close prior to March 30, 2026.
  • Subject to TSX Venture Exchange approval.
  • No finders' fees expected for the acquisition itself.
• Credit Facility Amendment:
  • 20-month extension of credit facility, bringing maturity to October 2027.
  • Outstanding balance: $5.85 million.
  • Amendment fee: $58,500 paid in cash.
  • Subject to TSX-V approval.

Notable Quotes

• "Viral Loops is precisely the type of high-margin, recurring revenue business we aim to acquire -- profitable, cash flow generative and strategically complementary to our portfolio. At approximately 2.9 times adjusted EBITDA, we believe this transaction reflects disciplined capital allocation with compelling immediate returns." — Ghassan Halazon, Founder and CEO
• "The acquisition of Viral Loops is expected to substantially enhance Emerge's profitability and cash flow profile, strengthen the company's balance sheet, and potentially improve our cost of capital over time." — Ghassan Halazon, Founder and CEO