​MYOB grows ERP offering with NZ$28.5m Greentree acquisition

MYOB has paid NZ$25.1 million on completion, and expects to pay the remainder in 2017 and 2018 when certain conditions are satisfied.
Written by Aimee Chanthadavong, Contributor

MYOB has bolstered its existing enterprise resource planning (ERP) offering, announcing the acquisition of Hei Matau Holdings 2000, the shareholder of the Greentree group of companies, for NZ$28.5 million.

According to MYOB, the acquisition will be funded from the company's existing cash reserves, with the company having already paid NZ$25.1 million on completion, while the remainder will be due in 2017 and 2018 based on satisfying "certain" conditions.

Auckland-based Greentree is an ERP software provider to 850 larger businesses across Australia, New Zealand, and the United Kingdom. Its product suite has on-premises ERP functionality and licensing is primarily perpetual with annual maintenance.

MYOB explained the acquisition will extend the company's mid-market ERP offering and increase total addressable market, while enabling the company to apply its marketing and distribution resources to grow through Greentree's existing channel.

"We are delighted to announce the acquisition of Greentree, in line with our stated strategy of targeting value-add acquisitions to complement organic growth. Greentree is a quality business and has a very experienced team who collectively bring a wealth of knowledge and experience in the evolving ERP sector," MYOB CEO Tim Reed said.

MYOB reported during FY15 its enterprise solutions division contributed to 13 percent of total revenue, and was up 4 percent to AU$41 million. The company at the time attributed the growth to the launch of MYOB Advanced in early 2015, and the successful integration of PayGlobal that was acquired in August 2014.

At the time of reporting its FY15 results, MYOB expected revenue to continue in line with "historical trends" and EBITDA margin to remain with the 40 to 50 percent range, and the number of online SMB customers to further grow in 2H16 and 2017 once the online version BankLink is available.

In early February, MYOB announced plans to bring its transaction processing, compliance, and advisory tools together onto a common platform, a vision it dubbed the "Connected Practice".

As part of the Connected Practice, MYOB created an online platform to give partners access to a single dashboard view across all of their clients' MYOB cloud accounting solutions. The dashboard includes many of the features found in the company's BankLink product, with the company noting it plans to add new features throughout the year.

Reed at the time said the idea behind the design of the Connected Practice follows on from the company's vision that it came up with a year ago, but never announced publicly, and has been working towards for the last few years.

"What we have started to see was our customers' businesses were evolving and changing; instead of there being a clear distinction between a bookkeeper, an accountant, and a certified professional or IT consultant, what we started to see was the progressive clients of ours were actually moving more to the middle where they were doing components of all of that," he told ZDNet.

"That made us start to think: 'If these aren't three separate partner groups doing separate things, and it's actually one partner servicing a wider range of needs for the small business, what would they want?' We said everything we're developing is helping them, and what would be even better is if there was a single MYOB platform to deliver all of those tools seamlessly."

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