Hello, and welcome to today's Tyler Technologies Conference Call. Your host for today's call is John Marr, President and CEO of Tyler Technologies. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference is being recorded today, October 1, 2015.
I would now like to turn the conference over to Brian Miller, Executive Vice President and CFO. Please go ahead.
Thank you, Andrew. Welcome to our call to discuss our announcements this morning. I'm going to give the Safe Harbor statement, then turn the call over to John Marr, our President and CEO, for his comments on the acquisition. Following that, we'll take your questions. I'd like to point out that as a supplement to the information contained in the press release, there's an investor deck with additional information on New World Systems and the proposed acquisition posted on the Investor Relations section of our website at www.tylertech.com.
During the course of this conference call, management may make statements that provide information other than historical information and may include projections concerning the company's future prospects, revenues, expenses and profits. Such statements relate to a variety of matters, including the operations of the businesses of Tyler and New World Systems separately and as a combined entity the timing and consummation of the proposed transaction the expected benefits of the integration of the 2 companies the company's combined plans, objectives, expectations and intentions and other statements that are not historical in nature such as future revenues, costs and expenses, operating income, earnings per share, margins, cash flows and capital expenditures. These statements are made on the basis of the current beliefs, expectations and assumptions of the management of Tyler and New World Systems regarding future events and are subject to certain risks and uncertainties. Investors are cautioned not to place reliance on any such forward looking statements, which speak only as of the date they are made. Neither Tyler nor New World Systems undertakes any obligation to update or revise these statements whether as a result of new information, future events or otherwise.
Such statements are considered forward looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties, which could cause actual results to differ materially from these projections. We refer you to our press release issued today and our Form 10 ks and other SEC filings for more information on those risks. With that, I'd like to turn the call over to John for his remarks.
Okay. Thank you, Brian, and good morning. We're extremely excited about the announcement today that Tyler has signed a definitive agreement to acquire New World Systems. Transaction is subject to regulatory approval and is expected to close in the Q4. We have known and respected New World, its founder and CEO, Larry Line Webber and their team for many years, both as a solid competitor in our ERP business and as a leader in the public safety space where we have not historically had a significant presence.
Larry will be joining the Tyler Board following the closing of the transaction. This is a complementary and extremely comfortable acquisition for Tyler. New World, like Tyler, is focused exclusively on the public sector. What they have achieved over more than 30 years in this space is remarkable and a testament to the skill and hard work of their leadership in the entire team of professionals. Tyler and New World share comparable values and strengths.
We see many similarities in the way both companies have entrepreneurial foundations, high client retention rates, strong financial results, long track records of successful execution of implementations and consistently competitive products. While this will be by far the largest acquisition in Tyler's history, it's very consistent with the strategy of our past acquisition and it supports our long term strategy of being an industry leader in all major enterprise applications essential to local government. We have a long and successful record of creating value through successful acquisitions and we look forward to building on that record with the addition of New World. New World's success is due in large part to their team, which like Tyler's has deep domain expertise and we have no plans to materially impact the New World workforce or their operations at their headquarters in Troy. In fact, we expect that New World's growth will accelerate as part of Tyler and that the combined companies will provide enhanced opportunities for all employees to advance their careers.
We believe transaction is compelling. From a product standpoint, we have for some time talked about our desire to expand our presence in the public safety space to complement our leadership position in courts and justice software. The public safety market, which is estimated to be at $2,100,000,000 annually is highly fragmented. The market has attractive characteristics, including a growing demand for new technology to support initiatives like Next Gen 9 11, which allows digital information such as voice, photos, videos and text messages to flow seamlessly from the public through the 911 network and onto the emergency responders. In FirstNet, a nationwide wireless broadband network dedicated to public safety.
New World is a leader in public safety software, which represents approximately 2 thirds of their revenues. New World has a robust suite of public safety applications, which are used by dispatchers, law enforcement officers, firefighters, EMS and correction officers. Applications include 911 and computer aided dispatch, mobile messaging, field reporting, records and management, corrections management and analytics. We believe that the addition of these applications integrated with our Courts and Justice solution will enable Tyler to provide an end to end solution spanning from a 911 call through probation that does not exist in the marketplace today. New World's public safety revenues have grown in the low double digits since 2012.
In public administration and ERP space, which represents the other third of New World's business, they have a very competitive application for financial management, payroll and human resources, community development, utilities, analytics and web based self-service. Many of these products overlap with other Tyler products, but we plan to continue to invest in and support the New World products and their extensive client base. We believe that with New World, we will have a strong cross selling opportunity with their existing and new clients for complementary Tyler products and services, including software as a service cloud based solutions, disaster recovery services and our Energo solution. From a financial standpoint, we believe the valuation on the acquisition is very fair and represents an attractive multiple in comparison to similar deals. The transaction will be immediately accretive to Tyler's margins, cash flow and non GAAP earnings.
We expect for the year 2016, the impact of the transaction will be to add approximately $134,000,000 to our annual non GAAP revenues, approximately $49,000,000 to our adjusted EBITDA and approximately $0.56 to our non GAAP earnings per diluted share. Tyler plans to continue to invest in and grow New World's products and to integrate them with Tyler products and these estimates include incremental spend on product development over New World's current level. Now Andrew, we'd like to take questions.
We will now begin the question and answer session. Your first question comes from Brian Kinstlinger of Maxim Group. Please go ahead.
Hi, good morning.
Good morning.
The first question I had, I'm curious in the Republic Safety business, what's the client overlap? Essentially, what's your upsell opportunity in your installed base for ODiSI?
We don't really know, Brian, exactly at this point in time. Haven't had the opportunity to completely compare those customer lists. Generally, Odyssey plays at a little higher level in terms of the size of the clients. So as you know, Odyssey has many statewide deployments, top 20 county types of deployments. So probably plays at a little higher level and does reach down into midsized counties and as well where New World would have a stronger presence.
New World would be a very strong player on the public safety side in the Tier 2, Tier 3 space. I think it's fair to say they have a pretty strong leadership position in that space. So there's some overlap, but there's also a great opportunity to take our courts and justice system downstream a little bit, as well as I think with our brand, the strength of our company and our presence in larger courts to move New World's public safety solution up into the Tier 1 space
as well.
Great. And then on the other side of their business, I think it's Logos, is that right? I'm curious, is that more of a competitor to Munis or Encode? Did you see them often when going after new deals? Just is it more a function of geography?
Just a sense of how you competed with them?
Yes. I'd say it's eightytwenty competitive with Munis over ENCODE. So again, strong Tier 2, maybe 2.5, maybe the lower end of 2 Tier presence, very, very strong Tier 3 presence. National, in terms of footprint, but certainly very focused and very successful in certain states over others. So probably not as mature a national presence as Munis has.
But you would want to look at it as very similar to the addressable market that Munis has, but again, probably not as far along in terms of a national rollout.
Great. Thank you.
The next question comes from Jonathan Ho of William Blair. Please go ahead.
Good morning and congrats on the acquisition. Just wanted to understand, first off, in terms of your thinking around acquired deferred revenue and also maybe if you can just walk through similarities or differences in terms of how the company structures contracts and the type of selling model?
The acquired deferred revenue, we're still quantifying that. We don't know exactly what the close date will be. So we don't know exactly what that is. But in the impact for next year that we presented in the press release, that is exclusive of the non GAAP or the write down for GAAP of deferred revenue. So that would be their normalized number.
Got it. And then just in terms of average deal length and the types of contracts that the company is using for selling, it doesn't sound like there's a SaaS product here. So I just want to get a sense of maybe the similarities or differences there across both the public safety side and the core business?
Yes. Our understanding is that the public safety side actually do about the same number of deals on Logos and Aegis Finance and Public Safety and have about the same number of existing clients, yet the public safety side is about twice as big. So obviously that suggests and our understanding is that those deals are larger. One of the things they do well in public safety is there is a movement toward combining agencies into Central 9 11 dispatch centers where a county might run a dispatch center for 7 or 8 small towns. So there's a lot of consolidation around that.
That's something that they have the ability to do. They have multi agency, multi jurisdiction functionality. And so it's driving some bigger deals. So their average sales price, and average customer arrangement, maintenance arrangement, in general is about twice as big on the public safety side. In terms of cloud, the good news is they have some cloud clients.
I think cloud is a more immediate opportunity on the Logos side. We know in Tyler's experience that the market is becoming more and more receptive to that and there's really not any resistance around it. The good news is, they do have a few clients not hosted in their facilities, but hosted at colos. And so the proof of concept is largely proven up. We'll do some more work there, but then we will introduce what we do as flips at Munis and other divisions to offer clients who want to stay with the same application, but do it on a hosted basis, that so that would be an opportunity to grow within the installed base to some degree.
Probably not as immediate an opportunity on the public safety side. I think the nature of public safety is still that generally it's preferred to be a deployed solution.
Great. And then just as a quick follow-up. Can you talk a little bit about product integration? I think you said you were going to continue supporting Logos, but just want to understand what your thoughts are in terms of overlapping product platforms, whether you would tend to merge those over time?
Yes. We'll certainly continue to support it and invest in the product. We'll certainly do some analysis as to what markets they have great success. They're a strong player in that space. And it's not just one homogeneous market.
Obviously, there's size and range of clients, there's geographies, there's state specific applications, there's a range of different things that make the same product more or less successful in sub segments of the marketplace. So we'll be doing that analysis and we're certain that the Logos system plays very, very well in certain segments of the marketplace and that's where we'll focus and invest further in those products. Our hope would be obviously that the combined market share that Logos and Munis and ENCODE share today is something we can continue and expand, which means that all of them need to be competitive in the marketplace. And it's pretty compelling the market share that combination will have.
Thank you.
The next question comes from Kirk Materne of Evercore ISI. Please go ahead.
Yes. Thanks very much and congratulations on the acquisition. John, I guess, can you talk just a little bit more about just sort of geographic overlap? I'd imagine one of the opportunities is obviously getting their sales of the new world sales force to be able to carry some of your products. Can you just talk about maybe where you see some areas of opportunity?
You guys have obviously been really strong down some of the Sunbelt states. And just any color on that would be helpful.
Yes, sure. They're very strong here in the Midwest. They're pretty strong in California and Southeast to some degree. So there's certain they really do have kind of a 2 tier market geographically. And so about 20 states would be characterized as franchise states is what they call them, where they have a very strong focus and a strong presence and good win rates.
That's where we'll obviously focus to continue to support a leadership position. Tyler other Tyler products and services, as you asked, is an opportunity for both the installed base as well as the new business market. We've been where they are, which is that their core financial system, their core payroll HR system is very, very strong, but there are all these other applications that enter into a decision process. And when that's just another application in a large suite, they can't all be industry leading. So if they get to something like the EnerGov side of the business, instead of that being 2 hours in the demo that you hope to get through, all of a sudden you're kind of a rock star in that particular segment.
And instead of getting through it, it elevates you to the next level in the decision process. So not only does it leverage another Tyler product as we've seen with Munis, working with EnerGov, it actually improves their chances of winning that particular name considerably. Going into their installed base, so they've got about 800 customer support agreements across a couple of 1,000 agencies. Obviously, a lot of those clients could use those same products. So as we mentioned in the opening remarks, to market services like disaster recovery, SaaS flips, Intergov solutions, is a great opportunity to sell into the base and create an even stickier relationship.
And then just Brian, I was wondering if you could just give us a little bit of an idea of at least you guys give some revenue guidance for next year. What should we be thinking in terms of maybe software versus services split? And maybe just a rough estimate of where kind of their gross margins were trending? It would seem to be there might be a little bit higher than where yours are, but I was just kind of curious if you can give us some idea on those two elements.
Sure. Their mix is not too dissimilar from ours. I think for this year, there'll be around 20% licenses, just a little north of 20% in services. So it's low 20 services. They're about 54%, 55% maintenance and 4% or so hardware and other.
Their gross margins, obviously, not a public company, Their gross margins are slightly higher than ours. And so this will be accretive to margins. Will be making some additional investments in particularly in product development. And so this the number the guidance we've given doesn't really reflects more additional costs than cost synergies. So but we do expect it to be somewhat accretive to our margins.
Okay. And are you assuming much in terms of sales synergies in the 1st year? I'm guessing not, but I just want to double check.
No. There will be some cost synergies, obviously. But we would say that there will be a net increase in spend. So over time, there'll be some shifts in heads, but again, this is a net investment. We'll accelerate some of the dev projects that we think could be impactful.
We'll accelerate some of the go to market and sales channel work. Obviously, there'll be some areas that go in the other direction, but it will be a net increase in investment.
Okay, great. Thanks guys.
The next question comes from Scott Berg of Needham and Company. Please go ahead.
Hey, John and Brian, congrats on the transaction. I guess one quick one for me would be on the size of the ERP space, at least with you and New World together, you create a pretty large kind of dominant market share there is. Would there be any antitrust kind of concerns or issues given your size in that end market?
We don't think so. We've been advised that it probably doesn't come near the threshold that would make it that issue. This is a multi $1,000,000,000 market. So we're still there may be small segments where obviously we have a concentration, but it's a very big market. I think the way you look at it from a macro standpoint and we're still a small part of it.
Okay. And then my follow-up on that, John, would be around the competitive dynamic within public safety. New World, my understanding is one of the larger competitors there, but how would you compare their competitive positioning and their win rates historically in that market relative to yours that have been obviously really high recently? Yes.
They just have a much bigger presence, address significantly larger part of the marketplace. It's just at a whole different level than what Tyler Public Safety has been at. We certainly will take care of those clients and continue the initiatives we have around it. But this is a much, much bigger presence in that space. As I said earlier, I think everybody, their competitors, the market everybody would characterize them as either a leader or the leader in the Tier 2, Tier 3 space.
They do very well in that space. It's a very mature product, so very deep functionality, high quality, going to run, they install and execute on time, manage scope, a lot of the things that Tyler does well. And obviously, risk averse clients looking for proven solutions, they're the place to go. The opportunity will be, I think, with Tyler's brand and the strength of the company to broaden that in terms of the size and range of these clients up into the larger tiers. And I think that opportunity is there.
And again, to accelerate some of the investment in newer technology and some of those things we mentioned along with NextGen, 911 and Dispatch and some of these areas in order to really have best of all the different worlds rather than just win on a few of the decision points that they happen to be strong at right now.
Great. Congrats again. Thanks for taking my
The next question comes from Alex Zukas of Stephens. Please go ahead.
Hey guys, thanks for the time and congratulations on the acquisition. I wanted to ask about the maintenance model that they had. Was it similar to the evergreen maintenance model you guys have? And is there a thought about transitioning there those relationships to your type of evergreen model?
Close.
I think they were later too. I think we probably drove or dragged some other competitors like New World to that. So I think they hung on to licensed upgrades longer than we did and they may have some still they still have several dozen AS400 type clients that will go through migration to their Microsoft stack products. So there may be some relicensing still going on, but it's limited. I think they've largely moved to more of an evergreen approach and that would be our direction to Tylerize that and move them completely in that direction.
Got it. And then, I apologize if you mentioned this on the call, but the total growth rate for the whole business, not just the public safety business, did you guys mention that?
No, it's been in the the combined business has been in the kind of high single digits in recent years, with obviously stronger growth on the public safety side.
Got it. And you guys mentioned the confidence that you can accelerate that growth rate. So what's kind of the underlying confidence there?
Well, we think that we can accelerate both sides of the business. I think on the LLOGAS side, again, selling Tyler products and services into their base, adding Tyler products and services to strengthen their competitive position in the new business market. And so I think that company can grow at a higher level than what it has been in the most recent years, but not tremendously high. It will grow below Tyler's, say, blended overall growth rate. The public safety side, we believe, maybe not immediately, obviously, you need to make these investments to impact the competitiveness, but we believe that we can accelerate that growth and grow that side of the business at a level above Tyler's overall growth rate.
And strategically, that's the whole objective here. Their margins and the quality of the revenues in the company are very, very good and certainly not dilutive to Tyler's position. And if we can achieve those growth rates and their blended growth rate be at or above Tyler's overall, then obviously this becomes a very compelling deal for Tyler. On the public safety side, it's a very fragmented marketplace. There have been a lot of companies that have gone the PE route in recent years, generally PE owned properties are properties we compete very well with.
They generally don't make the investments that we're prepared to make in this company. So the argument that a public safety and a criminal and a court and justice system integrated, nobody else can do that. There is no company that's a leader on either side of those that's a leader on the other side as well. We'll be the only company that's a leader in courts and justice as well as public safety. Now tomorrow, those systems don't work any better together, but I think the credibility of Tyler and New World's history of execution should even immediately improve our competitiveness just on the fact that that's the direction we'll be taking our clients.
Got it. And then were you looking at other assets in the market as well? And then why now? Is there something that compelled you to act?
Well, sure. There have been, as I said, a number of assets shopped. There have been some more significant sized assets shopped over the last year or 2, and there's a couple names out there that we still might think we'd see in the marketplace. But I can tell you this is our number one choice for a significant application, has been for a lot of years. It just fits very well, entrepreneurial, private company, the sense of urgency and execution that we still have at Tyler.
The public safety what they bring in public safety is very, very significant for us. All of those things, they deliver financial results while they improve products and take care of customers and employees. So it's just I think the fit and the strategic value of New World as a significant acquisition was at an entirely different level than anything else we've seen.
Got it. Thank you, guys. Congratulations again.
Thanks. The next question comes from Mark Schappel of Benchmark. Please go ahead.
Hi, good morning. Thanks for taking my question. Most of my questions have been answered. Just one though, John, it's my understanding that New World's products were Microsoft based principally. And if that's the case, does this present a problem with your strategy or your relationship with Dynamics?
No. In fact, most of Tyler's products are Microsoft base. So they use the Microsoft stack, we use their tools, we use their database and back end, as do an awful lot of products and applications out there in the marketplace. It's not a Microsoft application like Dynamics, but it really isn't any more competitive and it really isn't much different than Munis' stack or our ODiSI stacks, all Microsoft, really similar architectures.
Great. Thank
you. The next question comes from Tim Klasell of Northland Securities. Please go ahead.
Yes. Just want to talk about a little of the sales synergies. It seems like you're talking a lot about maybe bringing in some of the new old products up to the higher tiers. But is there opportunity to maybe sell some of your traditional products into the new world installed base? Thank you.
Yes, definitely. Products and services. So as I've said, like Intergov, title content management, appraisal, there's a lot of applications we have that they may or may not have, but maybe they have in kind of just a lower application level like say Munis did or ENCODE did. And over the years is we've either invested in or acquired industry leading applications in those kind of sub niches, they've been adopted across Tyler's customer base and we'd expect that to occur here. So these other Tyler products will be immediately available and sold through their inside sales channel and then services.
So we have a disaster recovery service for an example, where as an increment to your maintenance agreement, we load we take your files and put them on servers and have them available. And in the case of a disaster, we can run their solution. We've done that for many of our clients. And weather like we're having now in the East Coast
Excuse me, there has been an interruption in the call. Please be patient until the speaker location rejoins the call. The speakers have been reconnected. Please continue.
Sorry about that. I think we were talking about selling our products and services into their customer base. I'm not sure when we get cut off, but the answer was yes, we'll sell a number of the applications we have, such as Intergov, Talent Content Management, our mass appraisal products, a bunch of those products that we have that are industry leading that they didn't have or were maybe just a smaller part of their suite. We'll also offer our disaster recovery services, hosted solutions and those types of services into their customer base as well.
Okay, great. Thank you very much. Sure.
The next question comes from Peter Lowry of JMP Securities. Please go ahead.
Great. Thanks. So you guys had signaled that you might make a larger transformative acquisition and in particular in the public safety space. But can you maybe give us an update on your current acquisition stance if it's changed as a result of this?
Yes. It's net picky, but we're saying this is not transformative, because I look at this as a big deal. It's impactful, but because it's exactly the same end market, it's culturally and organizationally very similar, We really look at this as not being as transformative as the types of acquisitions that people do that address entirely new markets or leave their domain expertise areas. So we just would characterize it a little bit differently. As I said earlier, this is if we had a choice of the larger assets available, the deal that we could have been certain to make, this is the company we'd have, we'd want to work with.
I don't think it takes away our ability to do another deal. If one presented itself, you might be a little more disciplined just having done a deal, but the urgency is probably lessened somewhat, but we feel we remain a good position to continue to be opportunistic and if something presents itself to act on it.
Okay, great. Thank you.
The next question comes from Charlie Strauzer of CJS Securities. Please go ahead.
Hi, good morning. Can you talk a little bit more about the margins of the business that you're acquiring? They are healthier, it looks like you said, than the Tyler margins. And just what drives that? And also, who are some of the players on the public safety side that you would kind of consider more in the Tier 1 space that they would compete with?
Okay. Well, what's interesting in margins, Charlie, is their margins are nearly identical to the more mature parts of Tyler. So where we have product suites that have tens of 1,000,000 of dollars of maintenance and have reached a certain level of scale and a certain level of maturity, their margins are very, very similar to ours. So, that's the potential, as we've always said, of the entire company. Tyler probably has pursued more things with the intention that those would be catalysts for growth further down the road and sustain higher growth levels, and we have higher growth levels.
So we have products like EnerGov that we're investing heavily in, in their sales channel, in their products, in their professional service side that have much lower margins, almost by design, because we believe that that will continue to drive higher growth rates and eventually as it hits certain levels of scale will produce those types of margins. So again, their margins are reasonable. Their ability to have high margins, service their clients, their employees well and invest in products for the future those existing products for the future is exactly what we're doing at Munis, at Infinite Visions, at more mature areas of the business. They don't have the dynamics, the intergov, the school initiatives, a lot of the things that we have for maybe 30% of our revenues that have lower margins or no margins that bring our blended margin rates down. So that's a little bit of a look at the margin landscape.
The Tier 1 space, I guess, Intergraph, Motorola, some Tri Tech, Northrop Grumman, some of those names would be the names you see in the Tier 1 space as we move up into that.
Got it. And then do you think you have the competitive positioning to kind of move into that Tier 1 space on the public safety side now?
Yes. Over time, as a process, yes, I think our relationships in the Courts and Justice side, I think being able to talk about and eventually deliver added value by coordinating those 2 different suites that others can't do will add value. I think companies pure play software companies like Tyler and New World generally execute very well on projects, which generally outperform some of these larger companies that work primarily through integrators. So, I think we bring some advantages to that place. If you look on the financial side, you've seen Munis and some of our applications move into that space, and you've really seen less of the Tier 1 players in that space, the Oracles, the SAPs, whoever you might want to name.
So we think again, these are all long term strategies, but yes, we can see ourselves moving up into that space.
Great. And then lastly, was this an auction process?
No. There was no formal process. I wouldn't call it an auction process. I would certainly say he's an informed seller or the folks at New World certainly very well informed, understood the marketplace. I think we all believe that this was a fair valuation for both sides.
So very well informed, certainly well networked, but not a process.
Great. Thank you very much.
The next question comes from George Prince of RBC. Please go ahead.
Hey, congratulations guys.
Thanks George.
The more I look at this deal, the more I'm incredibly impressed. Congratulations again. If you could, could you talk about the potential technology opportunities or synergies between the two companies, the hooking the 2 together between the police, the 911 and your courts and justice, the financing, financials, whatever, is there a lot of opportunity to create new products and technologies and efficiencies there?
I'd say it's the former. When you talked about integration, I think the initiatives will be I'd say there's 2 initiatives as we move in that direction. 1 is to accelerate their investment in certain areas, NextGen, 911 and Dispatch, HTML5 or ubiquitous mobile, however you want to look at that. So that's an acceleration. And then secondly, what we generally do is we don't want to dictate to divisions exactly how they implement the technology stack.
A dispatch system is going to be architected different than a case management system or a payroll system. Some are online transaction processing systems, some are more database document management systems. And so the implementation of the technology should be done in a fashion that's ideal for that type of application. What we have created is kind of a Tyler technology team that creates standards, creates certain technology stacks, things like workflow and dashboards and user experiences that we encourage every division to use when they possibly can. So that as we move forward over time, as we do a joint public safety financial proposal and bid or a joint public safety in court proposal and bid that those applications look as much alike and work as much alike as they possibly could, again, without encumbering the engineering under the cover, so to speak, that those developers have to decide for themselves.
Okay. All right. Well, congratulations again. Good luck.
All right. Thanks, George.
The next question comes from Robert Moses of RGM Capital. Please go ahead.
Good morning, guys. Certainly a name I've heard you guys talk about for more than a decade. So glad it could finally come to fruition. So congrats on that. Just a question, I guess, Brian, on the financing itself.
I think you ended June with north of $200,000,000 in cash and you typically generate cash in the 3rd Q4. So, assuming this closes in the 4th quarter, I've got the company somewhere around 100 $1,000,000 in net debt, I guess, backing out the cash. Could you just talk about the revolver and the terms and how quickly you think you can kind of delever if that is a plan or do you expect to keep permanent financing given range?
No, that's the metrics you described there are right on. Today, we have about $265,000,000 in cash. So the borrowing under the revolver should be in the $100,000,000 range and from our cash flow, certainly will be enhanced with New World added to it that that debt would not be outstanding for a long time, absent other acquisitions or buybacks, which have been other uses of our cash. But no, we wouldn't expect to be leveraged very much or for very long from this transaction. The revolver, we're in the process of putting that in place.
As you know, we had a revolver that we hadn't used in some time that matured a little over a year ago that we let go. And so we're working right now to put that syndication together. We expect to have that in place over the next couple of weeks, but expect a typical 5 year term or 5 year term on the revolver and relatively small borrowings.
Okay. I think maybe you alluded to this, John, in terms of win rates, but your competitive win rates have been obviously very strong and part of that is just the investments that you did in the downturn. It's different competitive dynamics I guess on the public safety side, but is your sense that the win rates are close, if not as comparable to Tyler? Just a sense as to the kind of the win rates and kind of the versus the some of the names you had mentioned like Motorola and Intergraf, etcetera?
Of course, ours vary from one area to the other. It's nearly 100% in the courts and justice. It's probably in the 55% range in ERP. I would say that theirs are more in the 3rd range. So I think, 75% of the time they make the finals and maybe around 50% of the finals they get into, which is very high competitive position.
But obviously, do the math on that, you end up in the 35%, 37% range. So that would be an idea of their market share.
Got it. Thank you very much. Sure.
And we have a follow-up from Brian Kinstlinger of Maxim Group. Please go ahead.
Yes, great. I'm just curious on the $134,000,000 of revenue expected in 2016 and the $49,000,000 of EBITDA. I'm curious what that implies in terms of growth? And then is there any seasonality we should think about for 2016?
The growth, I think that would imply 8%, something like that right around there. And again, we have developing strategies to get that closer to Tyler's overall growth rate and we think that's reasonable. They have some seasonality, Q4 generally is their strongest quarter.
Great. And then the last question I had, I'm curious, Brian, is it too early to give us a sense what amortization will be in 2016 related to this deal?
Yes, it is a little
bit early. As we get closer to closing, we'll have a little bit better information on that, but we have engage an outside valuation expert to help us figure out what bucket those intangibles go into what that amortization will be. Great.
Thank you.
The next question is a follow-up from Mark Schappel from Benchmark. Please go ahead.
Hi, thanks again. Brian, just one question. How much cash does New World currently have and how much are they bringing over?
They currently have in the $50,000,000 $60,000,000 range. The agreement anticipates a neutral balance sheet. And so we're not sure exactly what it will have at the closing depending on what that date is. But we don't know exactly what that number will
be. It's probably fair to assume though that number is probably not going down based on their operating margins?
Not on the margins, but it depends on how they manage their working capital. Yes.
If their liabilities are less than that, then they could do a distribution. There'll be working capital adjustment. So I think the cash may be marginally below that when all is done. Thank you. I don't know.
If you plugged in $40,000,000 you'd probably be safe, something like that. We just don't know until we do the working capital adjustments.
At this time, there appear to be no more questions. Mr. Marr, I'll turn the call back over to you for closing remarks.
Great. Well, thank you and appreciate everybody joining us on the call today. As we said in our remarks, we're very excited about this opportunity and look forward to executing on it. Anybody has any further questions, feel free to reach out to us. Have a great day.
The conference has ended. You may now disconnect your line. Thank you.