SEC Newgate S.p.A. (AIM:SECG) signed an agreement to acquire a 60% stake in ORCA Affairs GmbH from Michael T. Schroeder for €3.5 million on December 23, 2020. Under the term, SEC Newgate will pay the consideration in fourth tranches. The initial consideration comprises a completion cash payment of €0.7 million for a 15% of the issued share capital of Orca Affairs, with attached voting rights of 60% passing to SEC upon signing of the agreements.

The first tranche consideration is payable on April 1, 2021, with the economic benefits transferring from January 1, 2021. SEC Newgate will make three further cash payments of deferred consideration in April 2022, 2023 and 2024 through an earn-out mechanism linked to the Orca Affairs' EBITDA for the financial years ending on March 31, 2021, 2022 and 2023, in each instance for further 15% tranches of the issued share capital of Orca Affairs. The total acquisition consideration is subject to a minimum of €2.2 million and is capped at €3.5 million.

As of December 31, 2019, ORCA Affairs reported turnover of €10.5 million. Michael T. Schroeder, founder, managing director and sole shareholder of ORCA Affairs will join SEC Newgate's Manager Committee, a governance body comprising all SEC Newgate group companies' managing directors. He will be assisted by Tanja Schüle, currently the managing director of Kohl PR, SEC Newgate's existing German agency, who will become Orca Affairs' general manager.

The transaction expected to close on April 1, 2021. The acquisition will be earnings enhancing in 2021. Richard Johnson and Benjamin Cryer of Arden Partners plc (AIM:ARDN) acted as a financial advisor and broker to SEC Newgate.

Eckart Petzold and Wolfgang Liebau of Luther Rechtsanwaltsgesellschaft mbH acted as legal advisor to SEC Newgate S.p.A. in the transaction.