MYOB to acquire payment processing provider Paycorp for $48 million
Accounting software company MYOB has announced its intent to acquire Paycorp, a payment processing provider, for $48 million. The deal is expected to close in April.
The announcement was made in hand with MYOB’s reporting of its earnings for the 2016 financial year; total revenues increase 13 percent to reach $370.4 million. The company saw $54 million in after tax profit, reversing a $42.2 million loss in the previous financial year.
With the total addressable market for fees from payments through accounting software platforms estimated to be over $700 million, Tim Reed, CEO of MYOB, said the acquisition brings the company a “significant growth opportunity” in the payment service industry.
“We know from our clients, that cash flow is consistently the number one pain point for small business operators and we are delighted that we can bring together a solution that enables our clients to reduce administration time and costs and improve cash flow through the automation of payment services for their businesses,” he said.
John Caliguri, CEO of Paycorp, added, “We are excited to join forces with MYOB, a market leader providing online solutions to businesses across Australia and New Zealand. This is the opportunity we’ve been looking for to deliver fully integrated payment solutions to many more clients across Australasia, and thereby help them improve their cashflow.”
The acquisition fits into MYOB’s ‘Connected Practice Strategy’, which looks to deliver “seamless connectivity” between small to medium businesses, advisors, and the broader accounting network. By leveraging automation tools in transaction processing and compliance, the strategy looks to enable new income streams for practices in business advice.
As it fleshes out this strategy, the company invested $56 million in research and development in the last financial year and expects to invest around 16 percent of revenue in R&D over the coming year.
MYOB’s last acquisition was that of New Zealand’s Greentree, developer of enterprise resource planning (ERP) software for $27 million in August. The acquisition was aimed at helping MYOB expand its offering to reach into the larger enterprise market.
Counting over 7,000 clients, the company’s Enterprise Solutions division accounts for 14 percent of its revenues. The division’s revenues jumped 26 percent in the last financial year to $52 million, with MYOB attributing $6.2 million, or 15 percent of the growth in Enterprise Solutions revenue, to the acquisition of Greentree.
The company’s largest base remains SMEs, however, with 1.2 million SME clients accounting for 63 percent of MYOB’s revenues. Its Practice Solutions division, which provides practice software to more than 40,000 accountants, accounts for 23 percent of revenues, while its Enterprise Solutions division counts over 7,000 clients, accounting for 14 percent of revenues.
Image: Tim Reed. Source: Supplied.