How StepChange’s BroadReach Deal Could Reshape Government ICT Advisory

Strategic Expansion into ICT Advisory

StepChange Holdings Limited (ASX – STH) has taken a decisive step to broaden its consulting footprint by entering into a binding agreement to acquire BroadReach Group Pty Ltd, a well-established Perth-based ICT advisory firm. BroadReach specialises in enterprise architecture, ICT strategy, solution design, and business analysis; services that complement and extend StepChange’s existing expertise in ERP transformation and cloud migration.

The acquisition brings approximately 40 senior consultants into StepChange’s fold, significantly enhancing its capacity to deliver high-impact advisory services. This move aligns with StepChange’s strategic ambition to deepen relationships with Tier 1 clients and government agencies, particularly within Western Australia’s public sector.

Financial Terms and Valuation

BroadReach reported FY25 revenue of $8.96 million and a normalised EBITDA of $0.94 million, reflecting a healthy margin for an advisory firm operating in a competitive market. StepChange is acquiring BroadReach at a maximum multiple of 4.6 times normalised FY25 EBITDA, with an upfront consideration of $2.5 million split between cash ($1.6 million) and shares (valued at $900,000). The shares issued will be subject to a 12-month voluntary escrow period, underscoring a commitment to long-term integration.

In addition to the upfront payment, StepChange has structured earn-out payments of up to $1.8 million, contingent on BroadReach meeting EBITDA targets for FY26 and FY27. This performance-based component introduces an element of risk-sharing and incentivises continued operational success post-acquisition.

Enhancing Government Sector Engagement

BroadReach’s strong, long-term relationships with multiple Western Australian government agencies; including WA Police, Department of Communities, Synergy, DPIRD, and DWER; offer StepChange a valuable platform to expand its public sector presence. The acquisition diversifies StepChange’s client base and positions the company to participate more fully in large-scale digital transformation initiatives funded through WA’s ICT procurement frameworks.

Combining BroadReach’s upstream advisory capabilities in enterprise architecture and ICT strategy with StepChange’s downstream expertise in SAP ERP and cloud migration creates a compelling end-to-end service offering. This integrated approach is increasingly critical as government and enterprise clients seek seamless digital transformation journeys from strategy through to implementation.

Outlook and Integration Considerations

StepChange Managing Director Shane Bransby emphasised the strategic fit, noting that BroadReach’s advisory depth and government relationships will enhance StepChange’s ability to lead complex digital programs. However, the success of the acquisition will depend on retaining key BroadReach personnel through the earn-out periods and effectively integrating the two companies’ cultures and operations.

Financially, the earn-out structure mitigates some risk by linking additional payments to performance milestones, but it also places pressure on BroadReach to sustain growth and profitability in a competitive ICT advisory market. Investors will be watching closely to see how the combined entity leverages cross-selling opportunities and secures new government contracts.