A New Acquisition. ISG's management announced yesterday the acquisition of privately-held Agreemint, an automated contracting solution company. A partner to ISG since 2021, Agreemint's AI-powered contracting platform brings important new capabilities to the market-leading ISG GovernX vendor compliance and risk management solution and will be used by ISG to add value to future platform solutions now in development.What is Agreemint? As mentioned, Agreemint is a contracting solution company that uses AI to deliver automated contract authoring through a repository of legal positions to speed the process to contract. Through its AI functionality, it enables users to negotiate better contracts, as it suggests language that is legal, governable, and agreeable to both parties, as well as anticipates language sticking points in a negotiation and includes a library that proposes pre-approved clause alternatives.All a Part of the Strategy. The acquisition is part of ISG's strategy of developing or acquiring Software-as-a-Service (SaaS) based platforms to complement its advisory business, bring more value to clients, and achieve consistent, double-digit recurring revenue growth. The acquisition will be adding towards its vendor compliance and risk management solutions, adding value towards future platform solutions. We expect additional bolt-on type acquisitions from ISG in the future.Details. Although terms of the deal were not announced, we expect ISG to use cash on hand to pay for the acquisition. Recall, ISG had $47.5 million of cash at year-end. The total addressable market for Smart Cloud Agreement is estimated at $50 billion, with about half of the TAM related to preparing, managing, and acting on contracts.Maintaining Outperform and $11 PT. We are maintaining our Outperform rating and our 12-month price target for III shares of $11.00. At our price target, III shares would trade at 22.9x our adjusted 2022 EPS, 14.3x our 2022 adjusted EBITDA, and 2.1x our 2022 revenue estimate. These multiples compare to a peer group average of 20.9x 2022 consensus earnings, 13.5x 2022 consensus EBITDA, and 2.1x 2022 consensus revenue. Read More >>