MYOB to buy Reckon crown jewels

Accountancy software firm has paid an eyewatering $180 million for rival’s advisory Accountants Practice Management unit.

Accounting software MYOB is forking out $180 million to buy a piece of rival Reckon’s portfolio, with CEO Tim Reed saying the move will help push its product far deeper into the small to medium business sector.

Buying Reckon’s Accountants Practice Management unit will help MYOB grow its adviser base and Mr Reed said increasing the footprint of the referral network will deliver a creating an opportunity to accelerate online SME growth via a larger referral network.

“The role of the accountant is going to increases in the end to end accounting process, we really wanted to secure and deepen the relationship we have with the accountants,” Mr Reed told The Australian.

The acquisition, which will be funded by debt, is the biggest acquisition by MYOB in recent years and comes with a hefty price tag.

Under the terms of the agreement, MYOB will take over Reckon’s Accountants Practice Management unit which is made up of three operating businesses — Reckon APS, Reckon Elite, and Reckon Docs. The division has a book value of $38m and Reckon’s total market cap is around $136m.

The unit serves more than 3000 accounting practices in Australia and New Zealand and according to Mr Reed, will play a key role in MYOB securing its future in the local market.

“For us this was the jewel in the crown, this is the product line and relationship that we see as highly valuable to us,” Mr Reed said.

MYOB plans to reinvest earnings generated from the unit in the first two years to fund increased investment in sales and marketing

The acquisition, which is subject to approval from the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission (NZCC), is expected to complete by the second quarter of FY2018.