Thursday, 13 November 2008

Sage and MYOB?

(By Richard Holway) Earlier this month, MYOB (accounting software for tiny businesses) received an unsolicited bid from a Private Equity vehicle (Manhattan Software Bidco Pty Limited - a vehicle of PE firm Archer Capital and US investment firm Harbourvest) valuing them at $478m. MYOB had received a PE bid earlier in the year that was over 30% higher. Since then MYOB shares have slumped (along with most others in the market)

George O’Connor of Panmure Gordon, made the following point in his note yesterday “We suspect that Sage has looked over it given the customer franchise of 700,000 businesses and over 10,000 accounting practices worldwide. Common with a number of trade buyers our impression is that Sage is ‘relaxed’ about making acquisitions currently seeing better value next year- we share this view”.

Sage has an incredible acquisition record – I have well over 100 on my list and that’s probably half the real number. MYOB would make a good coupling and would certainly be “sticking to the knitting”. Another coupling I have long suggested is with Intuit – although I accept that its size would more likely to mean that any bid was the other way around. I have also mused on an approach from Microsoft. But the Sage model (different solutions in different countries) is so different from the standard approach favoured by Microsoft in its approach to the SME business system market.

Although I agree with George about prices being even lower next year, opportunities like MYOB come up rarely.

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