buys new weapon in war vs. MBS: Accpac
Read this article at Accounting
by Seth Fineberg
Irvine, Calif (January 2004) - The battle lines between Best Software
and Microsoft Business Solutions in the accounting and business application
space are currently the only clear things in Bests plans to acquire
Pleasanton-based Accpac International Inc., as questions about integrating
both products and reseller channels remain.
In addition to clearing the standard regulatory hurdles surrounding
last months $110 million agreement by Best parent Sage Group plc
to purchase Accpac, the company must also determine how to tie its spate
of recent acquisitions together in a united front against MBS.
We do need to see where it all fits and that could take some time,
said Best chief executive Ron Verni. We want to have a strategic
umbrella brand. I dont believe there is tremendous overlap
in our products; that means there is a position where each product has
reached its own level and there is enough distinction between each product,
along with the ability to leverage our channels to broaden our offerings.
In addition to Accpac, there was the November acquisition of Softline
Ltd., which owns the BusinessVision and AccountMate accounting software
brands in North America, and Septembers purchase of Timberline Software
Corp., a manufacturer of accounting software for construction and real
Verni said that he plans to work closely with Accpac chief executive David
Hood to ensure a smooth transition.
Best expects the Accpac deal to be completed in February.
We had planned an IPO this year, Hood said, but the
fact is the public markets remain uncertain and this is a much more effective
way to bring immediate value to everyone.
Hood also said that he has no immediate plans to step aside and will be
a part of the companys transition for the foreseeable future.
The buy brings Best into markets it has had difficulty in penetrating,
such as Canada. We have been trying for years to get a hold of the
Canadian market and have had an entrenched competitor there [in Accpac],
Hood said that his companys market share in Canada is estimated
at between 55 percent and 63 percent.
As for chief competitor MBS, despite some views that the accounting software
market is saturated and will consolidate even further, Microsoft believes
that there is still plenty of room for all still involved. The small
and lower midsized markets are highly competitive, but still largely underserved
today, creating a significant opportunity for multiple companies to effectively
co-exist and deliver on customer needs, a Microsoft spokesperson
Considering its growing number of products, analysts agree that branding
the Best name is by far its greatest challenge, but they also feel that
Best has an edge over Microsoft. The Best message of staying within
the family is still very strong, said Helen Chan, senior analyst,
SMB strategies at Boston-based Yankee Group. Because Best grew through
acquisitions, there is the whole choice factor that is very consistent.
Microsoft doesnt give you as much of a choice.
Intuit Inc., which competes with Best and Accpac products, such as Peachtree
and Simply Accounting, respectively, stated that the recent move will
have little affect on its business. Its just not a big deal
for us, considering the huge number of accountants [approximately 140,000]
that recommend our products, said Steven Aldrich, Intuits
general manager of industry-specific and new market solutions.
According to NPD Group research, between October 2002 and 2003, QuickBooks
had an 80 percent stake, compared with Peachtree at 13 percent and 1 percent
for Accpacs Simply Accounting product.
The Accpac buy would bring an additional 600 employees and 7,000 worldwide
resellers to the Best family. Best has approximately 6,600 channel partners
in North America.
Verni said that Sage will top $1 billion in revenue and Best Software
should hit near $600 million. Best generated $425 million for fiscal 2003,
while Accpacs revenue for the year ended March 31, 2003, was $88.7
million, with an operating profit of $10.3 million.
Globally, Accpac is expected to add more than 540,000 business customers
to Bests nearly 1.8 million small and midsized customers in the
For Best and Accpac resellers, the initial excitement is still sinking
in, and slowly turning into questions about what products to carry and,
in some cases, how they will carry them, as well as the possibility of
increased competition among the channel.
New York-based Net@Work has resold Accpac
products for the past seven years and Best products for two years. Co-founder
Alex Solomon believes that his firm is one of a few that are well-positioned
to deal with the acquisitions implications.
Its always been political, selling both products, but all
of our guys are cross-trained and we can now truly say to our customers,
Here, you choose, Solomon said. Customers are
now demanding a whole suite of solutions and if you are a reseller and
cant provide that you just arent going to survive.