ShoreTel, Inc. (NasdaqGS:SHOR) entered into a membership interest purchase agreement to acquire Corvisa LLC from Novation Companies, Inc. (OTCPK:NOVC) for $8.5 million on December 21, 2015. ShoreTel will deposit 12% of the total consideration in escrow. The consideration is subject to adjustment based on Corvisa's working capital at closing and certain liabilities of Corvisa including unpaid transaction costs, indebtedness and bonuses. The deal is subject to the absence of any law or order prohibiting deal, absence of a material adverse effect, accuracy, in all material respects, of the representations and warranties of the other party at the time of the closing and compliance in all material respects of the covenants. The deal is subject to customary closing conditions and is expected to close in third Quarter 2016.

This acquisition is expected to accelerate ShoreTel's fiscal 2017 hosted revenue growth at around 30% by enhancing ShoreTel's solutions and architecture. ShoreTel expects the ongoing impact of the acquired Corvisa business in the first 90 days of operations to reduce its non-GAAP operating profit by approximately $3.5 million. The GAAP operating results will also be impacted by an additional $1 million related to one-time deal expenses in the third quarter of 2016. Based on its current expectations and factoring in the impact of the Corvisa acquisition, ShoreTel expects to return to non-GAAP operating profit in the quarter ending June 2016. Stifel, Nicolaus & Company, Incorporated acted as financial advisor to Novation Companies. Adam W. Finerman of Olshan Frome Wolosky LLP acted as legal advisor for Novation. Jeffrey R. Vetter of Fenwick & West LLP acted as legal advisor for ShoreTel.

ShoreTel, Inc. (NasdaqGS:SHOR) completed the acquisition of Corvisa LLC from Novation Companies, Inc. (OTCPK:NOVC) on January 6, 2016. $7 million was paid on closing and $1 million will be kept in escrow for a period of twelve months to secure certain indemnification obligations of Novation and $0.35 million will be kept in escrow to secure certain obligations of Novation in connection with the post-closing working capital adjustment. Matthew Lautz, Chief Information Officer and Vice President of Novation and Chief Executive Officer of Corvisa, resigned from his positions.