MYOB heads offshore

MYOB management has vowed to continue investing in the cloud and ongoing product development while pursuing opportunities in the US and other markets following its sale to a second private equity group.

Julian Smith, general manager NZ and general manager corporate affairs ANZ, said the $75 million three-year R&D investment that began when a consortium led by Archer Capital bought the software maker from its management nearly two years ago, would continue.

“Our focus is on commercialising the R&D investment into the cloud,” he said.

Smith vowed to keep product development and sales focus in Australia and New Zealand, despite the new owner’s likely market expansion to Europe and North America.

“It is certainly our business plan to focus quite aggressively in ANZ. Because of our R&D we are about to commercialise some really good technologies shortly.”

These would include making other MYOB packages available online, in addition to the entry level, basic MYOB Live Accounts available now.

Live Accounts was lunched last year following strong competition from start-up online accounting services Xero and Saasu. The company later launched MYOB Atlas, a website creation tool in conjunction with Google.

Smith said the company has acquired 20,000 new clients with the two products, attracting the attention of several interested buyers.

“We had three businesses aggressively competing to acquire the company. For us it was quite flattering – it tells us we’re on the right track.”

The new owners, Bain Capital, an investment fund with interest in other software companies, made a tidy profit last year when it sold a similar business to MYOB, the Italian-based TeamSystem. It bought Team in 2004 for $280 million Euros and sold in August for a reported $565 million Euros.

Bain will retain major ownership in partnership with MYOB’s management. Tim Reed remains chief executive.

It is understood Bain is considering expanding MYOB’s 1 million-plus customer base to include clients in the US, Britain and Asia.

Some MYOB resellers have not yet been officially told of the sale.

Irene Souris, a Sydney chartered accountant and MYOB certified consultant, said she had received no formal advice.

“To be honest I’m a bit in the dark as yet. There’s been no communication from MYOB either directly, by phone or email, so I’m not sure about the impact. But I’ve been involved with major mergers and acquisitions myself and initially there won’t be many changes.”

Clients had shown no jitters about the merger, pressing ahead with upgrades and new installations as planned.

“I haven’t got anyone delaying it. To the contrary, in the last week four new people rang up wanting to install the product,” Souris said.

Danny Moore, chief executive, Express Online, said he had only read about the merger in the press.

“They paid a lot of money for just one region (ANZ). They have a very successful business – it’s working too well. They’d be foolish to change anything,” Moore said.

Andrew Scaife, director at AACE, also a certified consultancy, believed this sale would prove less impactful than the first.

“From the newsletter received last week, they’ll keep the management in place,” he said.

Scaife, who also sells and installs the online package Sassu, said any MYOB product delays would have less to do with change of ownership and more with the fact the company has always been conservative with releases to ensure quality.

“I’d be interested to see if [the new owners] would be looking at taking the brand global. The former owners couldn’t crack the US market and the UK is difficult to crack.”

He said MYOB had been lucky and clever with its expansion around the time the GST was introduced, securing a dominant market position.

“They marketed themselves better.”

Smith admitted some small changes may occur in future.

“As the transaction proceeds there may be subtle changes, but nothing major. The head office will still be in Melbourne and our core focus will still be Australia and New Zealand.”