MYOB tips AU$12m in savings from Sol 6 deal

After receiving the green light from the Federal Court on Monday to merge with Solution 6, MYOB is anticipating eventual annual cost savings of AU$10 million to AU$12 million from the deal.MYOB chief executive offer Craig Winkler told ZDNet Australia  the merger would radically affect the proportion of revenues achieved by MYOB from its business arms.

After receiving the green light from the Federal Court on Monday to merge with Solution 6, MYOB is anticipating eventual annual cost savings of AU$10 million to AU$12 million from the deal.

MYOB chief executive offer Craig Winkler told ZDNet Australia  the merger would radically affect the proportion of revenues achieved by MYOB from its business arms. Pre-merger, the company had a revenue split last year of 88 percent for the business division and 12 percent for the accountants' division. However, the merger has now levelled the revenue split to 50:50.

Winkler said the merger has also increased the company's revenue from AU$90 million to AU$180 million. He is expecting the merged entity to have a market capitalisation of AU$500m.

MYOB is expecting annual cost savings of AU$10 to AU$12 million per year after they have fully rolled out MYOB's internal operating platform, IT systems, financial systems and telephony to the merged entity. This should take about three years.

"This will take a bit of time but we know the savings are there and we are quite confident about the AU$10 to AU$12 million cost savings a year," Winkler said.

Winkler assures that only the corporate head office team of Solution 6 will not be staying with the merged company and that job losses will be very minimal.

MYOB is setting its sights on bridging the gap between accountants and business owners as indicated by a small business survey conducted by the company.

The survey, conducted in July 2004 from a national sample of 2,722 small business owners and general managers, showed that 77 percent of business owners consider accountants to be their most trusted adviser. However, only a quarter approach their accountant for business planning advice.

The survey showed that 86 percent of the business owners ask accountants for advice on complying with the law, while 59 percent inquire about tax planning. Only 11 per cent of business owners sought advice on raising finance and 7 percent on succession or exit planning.

"Far too many business owners only use their accountant for compliance work -- such as tax returns and tax planning -- even though they are crying out for help on a range of issues. This highlights the significant gap and potential to bring the two together -- that is our challenge and mission moving forward," said Winkler.

He added that it was alarming to note that over half of the business owners only see their accountant once or twice a year given that accountants are the business owner's number one source of advice.

"At a technology level we're in the position of creating systems for both accountants and business owners, which gives us the opportunity to make these systems work better together. However, it goes beyond the technology. There is a gap between how business owners view their accountants and how they actually engage with them. We will work with accountants and business owners to change this perception and equip them with the solutions to make this relationship really deliver," he said.

Two products have been announced by MYOB that will hopefully mend the gap between accountants and business owners.

"We've already announced two products that help accountants to be able to provide business analysis to small and medium enterprises. The product can take the information and turn it into something that business owners can understand so that they can do something with the information. For instance, business owners can get stock levels advice and actually see the results," Winkler said.

Solution 6 announced its merger with MYOB last March in a transaction which included the sale of the professional solutions and enterprise businesses to Francisco Partners in San Francisco California.

The merged entity will operate as one global business under the MYOB name from 17 August.

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