With the pending acquisition of Navision by Microsoft waiting to close, a lot of talk has centered on the next purchase. But there’s not a lot left to buy, at least not a lot of household names that offer quality product, markets, or reseller or customer bases.
It’s not that there aren’t quality companies out there in the accounting software market. But there are not a lot of well-known companies. In fact, Microsoft’s purchase of POS vendor Sales Management Systems last week, underscores the fact that best candidates are likely to be companies whose names most of the market does not recognize. But let’s look at candidates and possible combinations—and no, these are not deals we’ve heard of. Let’s consider this the journalistic equivalent of Fantasy Baseball. So don’t call the companies, the reseller next door, or your broker, and tell them you read about a hot deal in this column.
Blackbaud: The biggest jewel remaining in the accounting software market is Blackbaud at more than $100 million in annual revenue. The company built its revenue on sales of the Raiser’s Edge fund-raising software. Blackbaud is trying to shift sales of its not-for-profit accounting software and Raiser’s Edge from an overwhelming direct sales approach to a VAR approach. MIP accomplished the same switch in the last five years, so it is an attainable goal. But one MIP reseller noted recently: "We compete more against Blackbaud direct than anyone else."
Crystal Decisions: This company makes Crystal Reports, the industry standard reporting tool, so maybe the company has nothing to gain by selling. Its Web site claims more than 250 ISV partners, including Hyperion and IBM and, of course, most of the accounting software mid-market. On the other hand, mention the possibility that one of the major vendors will buy this gem and you’ll see competitors shudder.
FrontRange Solutions: Once known as GoldMine, FrontRange is best known for the product of that name. You’d think somebody would have snapped this company up for its sales force automation tools as entries in the low to mid-level CRM market. Some resellers hint that FrontRange has too many software issues. Still, it’s got an installed base, a channel, and a widely recognized name.
Sage: There was a lot of talk, and even news reports, that Microsoft would buy Sage, the English parent of Best Software. With Microsoft buying Navision, I just don’t see it. The European Union didn’t balk at the Navision deal. But once that’s accomplished, it’s hard to see the EU letting Microsoft pick up Sage. Right now, I think Sage is committed to the global battle.
Exact Software: The same reasoning now applies to Exact, in the case of Microsoft, and maybe in the case of Sage. Would the EU stand for either of those companies picking up Exact? Best Software US president Ron Verni spent a lot of time at Tech 2002 denying that Sage would buy Exact. Some folks who claim to know say the Exact management team has a vision and doesn’t need the cash. Of course, offer somebody enough cash and that can change.
Intuit: The Department of Justice would not let Microsoft buy Intuit in 1993. It’s hard to see that happening now. On the other hand, in the current regulatory climate in Washington, you suspect the DOJ could sanction anything. There’s one possible deal that really intrigues me (and again this purely hypothetical). Wouldn’t Intuit and Oracle Systems make a nice combination? If the goal is getting a product line ranging from low to high, what better combination than Oracle, the database of choice in corporations and its accompanying financials (admittedly not as dominant) and Intuit, dominant on the low end? If Intuit’s middle-market strategy proves successful, this is a combination that would have a unique strength in all levels of business and would be willing to fight to the death with Microsoft.
Open Systems: Owner Michael Bertini owns two restaurants in Minneapolis, a Porsche, a boat, and a private plane. As long as he’s having fun with any of his toys, including this company, it’s hard to see him getting out of the business.
Softline: Softline is so new to the market, now owning BusinessVision and AccountMate in North America; it’s hard to say what its threshold for pain is (i.e. spending money to establish itself here). The best worldwide value might be Pastel, the low-end accounting software that’s been a hit, practically everywhere else but the United States, where it didn’t go anywhere. If you buy the argument that companies need a low-cost line as a feeder to mid-market products, this might make Softline appealing.
Synex Systems: These folks make F-9, a nice analytical tool. Why not buy this company and fold it into a back-office system?
MYOB: MYOB remains the only well-known company marketing both Mac and PC-based accounting products. It recently announced it has a 54.4 percent share of the Mac accounting software market. Suffice it to say Mac-based accounting is not a major factor in much of the business world. Still, it has a high-quality low-end product that just might be worth some higher-level vendor’s worth in trying to develop a feeder system of small businesses.
