Reckon announced yesterday it will sell its accountants practice management division to MYOB in an all-cash sale of $180 million, subject to regulatory clearance from the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission (NZCC).
The acquisition will boost MYOB’s market presence significantly and deepen ties to the top 100 firms in Australia, but Mr Reed believes the “multiple technology partners” approach firms take will help maintain market balance.
“It’s a question of depth and breadth. So today we probably already work with all the top 100 accounting firms in some one way, shape or form. So would Reckon, so would Xero, Class and BGL,” Mr Reed told Accountants Daily.
“From a breadth perspective, I’d say most of those firms use multiple technology partners. From a depth perspective, yes it will deepen our relationship, but I don’t think it will materially increase our penetration into how many accounting firms [we have] relationships with,” he said.
MYOB took the option of seeking clearance from the regulators prior to the acquisition, rather than go ahead and risk the transaction being undone if the competition watchdogs took issue with it.
“We just think it’s a good way to do business with respect for that client. It’s the right way to approach it for shareholders. So we will wait for the regulators’ approval, we are confident this will come. We wouldn’t have gone down this path and put time and effort into it if we didn’t,” Mr Reed said.
“You stand back and you look at the change in this category over a period of time and say 'wow, this is an industry where the competitors change pretty frequently, underlying technology moves, and that creates opportunity for competition',” Mr Reed said.
“We think that this is a competitive market and we think that our position in it is one of a leading player but not the standalone leader, we think it’s a market that is well served by multiple vendors.
“We are confident it will come because of the number of choices that accounting practices have, and the number of solutions in the market.”
There is no clear ETA for regulatory approval at this point, but MYOB believes Q2 next year is a fair estimate.
In the meantime, Mr Reed said MYOB and Reckon will operate as two separate businesses.
“This makes just as much sense in four months as it does in four days, so out of respect for the regulator and the important role they play, there’s no reason to take any risk at all, that’s just commercial common sense,” Mr Reed said.