SMB accounting software vendor Reckon has broadened its reach, buying out specialist professional accountancy software vendor Advanced Professional Solutions (APS) for $10 million.
Clive Rabie, COO of Reckon, said APS specialised in developing and licensing practice management, tax and professional client accounting software targeted at professional accountants.
Reckon produced the Quicken range of business and consumer software so the buyout would open up a new market for Reckon.
'We like the technology and we like the returns APS has given and we like the management,' Rabie said.
Reckon figures suggest that Australia has at least 9,800 accounting practices, each of which spend on average $12,500 a year on software. More than $120 million in revenue is earned from accounting firm software licensing and maintenance.
As part of the deal – which takes effect 1 January 2004 – Reckon would acquire all three APS operations, in Australia, New Zealand and the UK, including three offices and 60 to 70 staff. Previously, Reckon had no presence in New Zealand or the UK, Rabie said.
No associated restructure of resources has yet been scheduled. The merged operation would have 190 to 200 staff and keep APS' former head office in North Sydney as well as Reckon's Pyrmont base for the foreseeable future, he said.
'I would hope to add some staff,' he said. 'It should come together without any change. I think we'll be able to add to their expertise and experience.'
Rabie said Reckon would drive further into niche markets in 2004. The company would increasingly target industry verticals with specific products and expected to diversify its range accordingly, he said.
The buyout would be funded with existing Reckon cash reserves and an issue of about 8.5 million ordinary shares. Some $8 million is payable by March 2004, subject to completion and adjustments, with $2 million held in escrow for 18 months, subject to APS' performance.
Rabie said APS would operate as a separate division within Reckon and management had so far agreed to stay on.
He said that APS had 'three or four' products – which it sold direct – including Advance Practice Management, Advance PIQ and Advance Tax. Reckon had no plans at present to move the products through its professional partner channel, he said.
'We might look at that down the track,' Rabie said.
APS had supplied software to about 50 percent of Australia's top 100 accounting practices, 60 percent of New Zealand's top 30 accountancy firms and 10 percent of the UK's top 100 accounting practices.
'Both companies have been very successful,' Rabie said.
APS recorded revenues up 42 percent on the previous year for the full year to 30 June 2003, recurring maintenance revenues up 54 percent and sales growth up 68 percent in Australia and 45 percent across all three operations, according to figures released in a Reckon statement.