PAR Technology has appetite for more deals following two in March, CEO says
PAR Technology [NYSE:PAR], a global enterprise foodservice technology company, remains opportunistic following two recent acquisitions and could land another deal at any time, President and CEO Savneet Singh told Mergermarket.
“I don’t think you can ever stop,” Singh said of considering buys. “Sometimes you have to take a huge swing.”
One option that New York-based PAR Tech hasn’t considered before and is open to now is buying a competitor to gain market share, he said. The company pivoted from hardware to software and rebuilt its platform a few years ago. Even still, a customer acquisition play comes with more risk, Singh said.
Products in the industry are “very disjointed,” Singh said, adding that his company intends to stitch them together. The industry is flush with software solutions on the front-end that help the customer, and PAR Tech is exploring solutions that help in the kitchen, he said.
The company offers front-end solutions like point-of-sale processing, loyalty programs, drive-thru technology and digital ordering. It also offers solutions on the fulfillment side, including staff management, inventory management, and food management and ordering.
PAR Tech has interest in data-focused buys because artificial intelligence is still relatively small in restaurants, he said. “I think we would take it real serious,” he said when pressed. The ability to create value from AI increases tremendously as products are consolidated into one house, Singh explained.
It can digest transactions in the USD 200m range like the two it executed in March, the CEO said. It will consider targets as small as USD 1m in annual revenue and could look larger than a USD 200m price tag, he added, noting an early software target at acquisition had more software revenue than PAR Tech did.
Future deals could be financed in several “creative” ways, but with a high cost of debt presently, cash and stock, like with the recent deals, would be most likely, he said.
The overall M&A environment in foodservice software is robust and healthy, Singh said, noting it is “seeing more deals than we’ve ever seen before.”
In addition to restaurants, PAR Tech serves retail shops, convenience stores and fuel stations. It has more than 100 customers in 70 countries, including half of the top 100 global brands like Starbucks and McDonalds.
The company announced two acquisitions in March, buying digital engagement software provider Stuzo Holdings for USD 190m and Australian software company TASK Group [ASX:TSK] for cash and common stock valued at approximately USD 206m. The TASK deal is expected to close after receiving the necessary approvals in 3Q24.
Those negotiations took a few months, but the courtship lasted three years, according to Singh. For Stuzo, PAR Tech had decided to buy versus build a similar offering, he explained. Although it was “not the high bidder,” the company made an aggressive offer and won because of its culture, he added.
The combined company stands to generate more than USD 200m in annual recurring revenue this year, Singh said. The CEO declined to put a timeline on reaching sustainable profitability, but said the company is “very close.” It posted a 2023 net loss of USD 69.8m, compared to a net loss in 2022 of USD 69.3m, according to its latest 10-K.
The company’s market cap is around USD 1.2bn.
Its competitors are Oracle [NYSE:ORCL], NCR Voyix [NYSE:VYX] and Olo [NYSE:OLO], according to Singh.
PAR Tech used Gibson Dunn & Crutcher as legal counsel on the two March deals and likely would again, he said.
by James Ward in Charlottesville, Virginia
