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Converge Technology Solutions Acquires Software Information Systems, LLC

By CIOReview | Tuesday, April 16, 2019
TORONTO, ONTARIO, CANADA - Converge Technology Solutions Corp. ("Converge" or "the Company") (CTS) announced today announced today that it has acquired all of the Class A membership interests in Software Information Systems, LLC ("SIS"), a South-Central US based partner focused on managed cloud delivery, compute efficiency, network optimization, storage optimization, and IT spend optimization, from VBS Holding Company, Inc. ("VBS"), whose owners include the current management team of SIS. SIS brings highly skilled teams of experienced technology experts, business consultants, and industry thought leaders to Converge's fast growing platform. SIS generated revenues of approximately US$89 million including approximately US$13.7 million of managed services revenue, gross profit of approximately US$24.3 million and Adjusted EBITDA of approximately US$2.6 million for the trailing 12 months ended November 30, 2018. Consideration for the purchase consisted of (i) US$11.5 million in cash; plus (ii) the issuance of a right to VBS to exchange the Class B membership units in SIS still held by VBS (which have no right to any economic or voting participation in SIS) for an aggregate of 8,000,000 common shares of Converge (the "Exchange Right"), subject to certain conditions.

No exchange under the Exchange Right will be permitted until at least six months from the acquisition of SIS, at which point 1,500,000 Converge common shares will become eligible for issuance pursuant to the Exchange Right. An additional 1,500,000 common shares will become eligible for exchange on each six month anniversary of the completion of the transaction thereafter, such that all 8,000,000 common shares will only be available for exchange following the three-year anniversary of the acquisition. Once all of the Class B membership units in SIS have been exchanged pursuant to the Exchange Right, Converge will hold all of the membership interests in SIS. The Exchange Right will allow VBS to receive the equity component of the consideration for the acquisition of SIS on a tax-deferred basis, while giving Converge full control of, and economic interest in, SIS immediately.

SIS President & CEO Steve Sigg will continue in his role along with the rest of the existing SIS management team. Working with Steve, Converge will introduce its hybrid IT solutions including identity-based enterprise Blockchain, cognitive, cybersecurity, resiliency managed services and multi-cloud solutions to existing and new SIS customers while leveraging the SIS advanced managed cloud service offerings across North America.

SIS is a 36-year-old technology solutions and services company, collaborating with customers on innovative data center strategy, technology solutions in the cloud or on-premise to help customers drive impactful business results.

"The team at SIS has been committed to assisting our clients understand the challenges and benefits of public, private and hybrid cloud consumption. Our private cloud delivery solutions allow customers to self-provision and manage cross platform capabilities for IaaS, backup, resiliency, and security of their hosted workloads," said Steve Sigg. "We look forward to working with the Converge companies to bring SIS competencies to their clients and introduce the expansive Converge product and service portfolio to our existing clients."

"We are thrilled that SIS is joining the Converge family of companies," said Shaun Maine, CEO of Converge. "SIS adds full scale managed services and cross platform cloud solutions, which when combined with the capabilities of Microsoft Azure from Corus; Amazon Web Services form BlueChip Tek; cloud, cognitive and cybersecurity from Essex; and software and Red Hat from Lighthouse add significant capabilities to the Hybrid IT solutions Converge can offer to its customers. This acquisition solidifies Converge as a major Hybrid IT provider in North America."

SIS marks the eighth transaction completed by Converge since October 2017. Converge's family of companies also includes Corus Group, LLC; Northern Micro, Inc.; 10084182 Canada Inc. operating as Becker-Carroll; Key Information Systems, Inc.; BlueChip Tek, Inc.; Lighthouse Computer Systems, Inc.; and Essex Technology Group, Inc.

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