Intelligent Protection Management to acquire AdTech business for up to $2.7 million

Intelligent Protection Management Corp. (Nasdaq: IPM) has entered into a definitive agreement to acquire the information technology, telecommunications, connectivity, managed services, and related infrastructure solutions business of Advanced Technology Distributors Inc. (AdTech) for a purchase price of up to $2.7 million, subject to customary adjustments. The transaction is structured to expand IPM's managed services capabilities and establish a platform for continued growth.

The acquisition will be executed in two stages through AdTech IT LLC, a wholly owned subsidiary of AdTech designated as JVCo. At the initial closing, IPM will acquire 49% of the outstanding membership interests of JVCo. At a subsequent final closing, IPM will acquire the remaining 51%, making JVCo a wholly owned subsidiary of IPM. No consideration was paid by IPM at the signing of the purchase agreement.

The closing timeline is tied to regulatory approvals from the California Public Utilities Commission (CPUC). The first closing is expected to occur promptly after the CPUC approves a Tier 2 Advice Letter regarding the transfer of AdTech's competitive local exchange carrier (CLEC) license to JVCo. The final closing is expected to follow promptly after the CPUC approves a change-of-control filing related to that CLEC license. Both closings remain subject to other conditions set forth in the purchase agreement.

The aggregate consideration of up to $2.7 million includes a cash payment at both closings, a seller note, and a performance-based earnout payment payable upon the achievement of certain milestones.

Jason Katz, Chairman and Chief Executive Officer of IPM, stated that the transaction represents an important milestone in the company's growth strategy. He noted that AdTech has built a strong managed services business in California with long-standing customer relationships and a recurring revenue model that aligns with IPM's existing managed solutions practice. Katz said the combination is expected to enhance customer engagement and drive opportunity growth by cross-selling complementary IT services and solutions across a larger combined customer base.

James Lawson, founder and President of AdTech, added that the merger will combine IPM's cybersecurity expertise and managed IT capabilities with the skills of the AdTech team. Lawson emphasized that existing customer contracts and services will not change upon signing the agreement, and customers will continue working with the AdTech team they know and trust.

IPM believes the transaction will strengthen its managed services platform by expanding customer reach and increasing recurring revenue opportunities. The company aims to use the acquisition to broaden its client base and position itself to capitalize on opportunities in the managed services market.

Haynes and Boone, LLP is serving as legal counsel to IPM, while Virtus Law, PLLC is serving as legal counsel to AdTech.