Accounting software company MYOB has announced its intentions to wholly acquire payment solutions provider Paycorp, which will add automated payment capabilities to MYOB's product suite.
For a total consideration of AU$48 million, MYOB will also take on Paycorp's customer base of 6,500, which spans the banking, insurance, telecommunications, utilities, and government sectors.
Currently, Paycorp provides services including secure online payment solutions, such as credit card, direct debit, and BPAY; integrated POS terminal solutions; accounts receivable automation; secure credit card data storage; and tokenisation solutions.
MYOB CEO Tim Reed told shareholders on Thursday that the addition of Paycorp will open up significant growth opportunities for his company, particularly in the payment services 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," Reed said.
"Through this acquisition, we will be the first to market with an integrated payment and accounting solution to our clients, which will create a new revenue stream for MYOB while staying true to our vision of helping businesses succeed."
The acquisition will be funded from the company's existing cash reserves, and is expected to be finalised by April 1, 2017.
The Paycorp acquisition follows the August acquisition of Hei Matau Holdings 2000, the shareholder of the Greentree group of companies, for NZ$28.5 million.
The Hei Matau Holdings 2000 acquisition was made to bolster the company's mid-market enterprise resource planning (ERP) offering and to increase total addressable market, while enabling the company to apply its marketing and distribution resources to grow through Greentree's existing channel, MYOB said at the time.
"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," Reed said previously.
For the 2016 financial year, MYOB posted AU$54 million in after tax profit, up substantially over its FY2015 loss of AU$42.2 million.
Revenue for the 12-month period was AU$370.4 million, representing a 13 percent increase over the same period a year prior. Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) for the year was AU$164 million.
SME Solutions was the company's highest performing segment, reporting revenue of AU$233 million, representing 63 percent of overall revenue for the company.