Breaking news just to hand that UK accounting vendor Sage is considering making a bid for Australasian vendor MYOB. Sage has long had a strategy of growth by acquisition and tends to let the acquired company continue to run independently – this has led to some confusion in the past. Case in point being MyBusinessOnline, a product created by SOuth African vendor (and Sage subsidiary) Pastel. When I reviewed the product a couple of years ago I was pretty impressed, and commented that it was a shame that Sage wasn’t looking at the innovative work its far-flung divisions were doing to build a coherent and consistent product catalog.
Drury went further however to contend that the selling of MYOB indicated a changing of the guard and a stripping out of core assets. he went so far as to claim that;
…thousands of Australasian small business customers are going to be sold to a new business owner. It also potentially marks the end of the old Windows desktop software model in Australasia
I don’t see it that way – the acquisition of MYOB will only occur if potential suitors believe there is an ongoing and lucrative revenue stream apparent in the company. Were this to mark what Drury is calling the beginning of the end of the incumbent players, it would be very unlikely that Sage (one of those dying players in Drury’s mind) would either be in a position to buy, or have the desire to acquire another “legacy vendor”.
The comment from Drury that:
This is the most significant vendor flip the small business accounting space has seen in a generation. In Australia and New Zealand hundreds of billions of GDP are managed through these platforms – and now there is uncertainty on who will own those businesses. Two big customer bases are about to be sold out. Who will be the trusted custodian of these transactions?
also misses the mark in my view. Sage is a publicly listed company with a valuation of $5.5B, it’s a little disingenuous to suggest that the new breed of vendors (of which Xero is arguably the leader with a roughly $200M valuation) will give customers a higher degree of certainty than the incumbents – no matter who owns them at any point in time.
Rather Sage sees MYOB with an incredibly dominant (although admittedly more threatened than previously) position in the marketplace and sees the opportunity to acquire that revenue and invest in building technology to cement that position going forwards. Between the two companies there is roughly seven million customers (6M for Sage, 1M for MYOB) spread across the world – this deal, if it goes through, creates a massive amount of consolidation with (if handled correctly) some great potential technology synergies.