by Seth Fineberg

Irvine, Calif. -- The battle lines between Best Software and Micro­soft Business Solutions in the accounting and business application space are currently the only clear things in Best’s 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 month’s $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 don’t 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 September’s purchase of Timberline Software Corp., a manufacturer of accounting software for construction and real estate.

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 company’s 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],” said Verni.

Hood said that his company’s 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 said.

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 doesn’t 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. “It’s just not a big deal for us, considering the huge number of accountants [approximately 140,000] that recommend our products,” said Steven Aldrich, Intuit’s 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 Accpac’s 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 Accpac’s 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 Best’s nearly 1.8 million small and midsized customers in the U.S.

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 acquisition’s implications.

“It’s 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 can’t provide that you just aren’t going to survive.”

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