Elevate enters LOI to acquire security service provider

Executive Summary

• Elevate Service Group Inc. has entered into a letter of intent to acquire an Ontario-based security solutions provider, marking its entry into the security service market.
• The transaction values the target at approximately $3.5 million, structured through a mix of equity, cash, and a convertible promissory note.
• The acquisition is part of a broader consolidation strategy to expand service capabilities, increase recurring revenue, and integrate synergistic operators in Canada's facility service landscape.

Key Details

• Transaction Value: Approximately $3.5 million total consideration.
• Consideration Structure:
  • $1.0 million in Elevate common shares (price based on an average formula prior to closing).
  • $500,000 in cash payable at closing.
  • $500,000 in cash payable on the 12-month anniversary of closing.
  • $1.5 million subordinated promissory note bearing interest at 2% in year one, 3% in year two, and 4% in year three.
• Note Terms: The $1.5 million promissory note is convertible into Elevate common shares at a 10% discount upon maturity.
• Lock-up: Shares issued to the vendor are subject to a four-year phased lock-up.
• Management: The vendor is expected to join Elevate in an operational leadership role under a new employment agreement.
• Target Profile: Ontario-based provider focused on commercial clients, offering site assessments, system installations, access control, video surveillance, gate automation, intercom solutions, and remote hosting.
• Target Customers: Property managers, retailers, restaurants, and other blue-chip customers.
• Financial Projections (Target):
  • Expected revenue for the current fiscal year: Over $4 million.
  • Revenue growth: Over 25% from the prior fiscal year.
  • Recurring Revenue: Approximately $1.4 million from monitoring and hosting services with low customer churn.
  • EBITDA Margins (Fiscal 2025 forecast): Between 13% and 15%.
  • Backlog: Record backlog with strong visibility supported by multiyear contracts.
  • Note: All financial information is unaudited.
• Closing Conditions: Anticipated to close in December 2025, subject to customary closing conditions and regulatory approvals.
• Strategic Rationale: Expansion into a new service line, revenue growth/diversification, and operational integration/synergies.

Notable Quotes

• No direct quotes from the CEO/President were included in the provided text.