The deal could be worth as much as £2.2 million.

Under the terms of the agreement, £800,000 is to be paid in cash on completion, funded by System C’s existing resources. A deferred payment capped at £1.4 million is dependent on performance targets being met over the next two years, and will be satisfied in cash and shares.

The acquisition not only widens System C’s market, but expands its product range.

System C has been providing information services to the healthcare sector since 1983, specialising in developing patient administration and record systems. The company has installed systems in 130 NHS trusts and its clients include local service providers, the NHS, and third-party suppliers.

IQ supplies patient management and clinical software to private treatment centres and hospitals. Its clients include private healthcare providers Mercury Healthcare, Centres of Clinical Excellence and Nations Healthcare. Last year IQ reported a turnover of £900,000 and pre-tax profits of £150,000.