The Australian Competition and Consumer Commission (ACCC) has given cloud accounting software firm MYOB the green light to acquire GreatSoft, despite initially raising concerns that the transaction could "substantially" lessen competition in the accounting software market.
In February, ACCC said if it allowed MYOB to acquire GreatSoft, there would only be three major suppliers of practice management software to medium-to-large accounting firms. The consumer watchdog also believed that GreatSoft has the potential to grow into a larger company.
However, following an investigation into GreatSoft's potential to grow, the ACCC concluded the company was "likely [to] face challenges expanding its small customer base in the short to medium term if the acquisition does not go ahead".
"GreatSoft's growth has been limited since it entered the market and we saw little evidence that it would grow to be a significant force in the market in the short to medium term," ACCC commissioner Stephen Ridgeway said.
"GreatSoft would have to manage market uncertainty arising from this transaction, maintain integrations with third parties, some of whom are competitors, and its prospects did not look good given it has missed the prime selling window for accountants to switch on 1 July."
The ACCC added that following the proposed acquisition, both MYOB and GreatSoft would continue to face "significant" competition from the likes of Xero and Reckon.
MYOB first announced plans to acquire GreatSoft back in October. At the time, MYOB CEO Greg Ellis said the acquisition would fast-track the company's delivery of a cloud-based practice management solution.
"This is a significant step forward in MYOB's acceleration of cloud-based practice management solutions and will provide accounting practices with new capabilities to drive connectivity, efficiency, and security for accountants and their clients," he said at the time.
Off the back of ACCC's decision on Friday, MYOB said it will enable the company to expand its cloud business business management solutions.
"The success of our accounting partners is important to us, and this acquisition will increase our offering of leading SaaS solutions to accounting practices across Australia ... we look forward to announcing more details on the integration of GreatSoft with MYOB in the coming months," the company said in a statement.
To be given the go-ahead with this acquisition is a different story to when MYOB had proposed to acquire Reckon back in 2018.
The ACCC had raised concerns that acquisition would lead to MYOB gaining a market monopoly as a result of a deal that was worth AU$180 million.
In the end, MYOB pulled out of the deal, citing it was not prepared to go through a long regulatory process that would take place if the acquisition went ahead.
Updated at 1:35pm AEST, 16 April 2021: MYOB comments added.