MYOB is outlaying NZ$14 million for Ace Payroll, describing the deal as a “strategic move” to drive growth strategies and solidify its position in the New Zealand market, the home territory of its major accounting software competitor in the ANZ market, Xero.
MYOB also announced today that it is embarking on the development of the next generation of online payroll solutions for New Zealand businesses, saying that it is experiencing strong uptake of its online solutions, with 67% of new customers choosing a cloud accounting solution in Q4 2014.
The signing of an agreement to buy Ace Payroll comes within a month of MYOB’s listing on the ASX.
“Ace Payroll provides payroll solutions for thousands of New Zealand SMEs. Both Ace and MYOB have been in the New Zealand market for over 20 years, and have established track records of making it easy for employers to pay their staff.
“MYOB has extensive experience in supporting customers in running their payroll. When business owners need advice about payroll, they need it straight away. Both MYOB and Ace Payroll have the same approach to making business life easier for our clients by providing phone support. This is yet another reason why uniting our companies makes sense.”
Reed says Ace Payroll is a profitable business that will be “immediately accretive to both our earnings and EPS, although the timing of the deal will mean the 1H earnings impact will not be material”.
But, Reed says market overlap between the two companies won’t have a significant impact on the number of paying users.
“Due to the sizeable overlap with our existing MYOB client base, the increase in our number of paying users will also be small, but it will help bolster our ARPU (Average Revenue per Paying User) in New Zealand and will deepen our relationship with many New Zealand clients, as we will now provide them with both accounting and payroll software.”
Commenting on the deal, Ace Payroll founder Phil Eriksen said that uniting with MYOB was the best possible outcome for the company’s customers.
On the development of the next generation of online payroll solutions for New Zealand businesses, Reed says that with the new solutions is s MYOB’s goal is to remove complexity and create even simpler solutions “to help business owners build better relationships with their staff.”
“Our research and development spend – over $100 million in the past three years – is entirely focused on the Australian and New Zealand markets. Not having to split our resources across multiple regions means that MYOB can provide world-leading SME payroll and accounting solutions specifically for small businesses in Australia and New Zealand.”
“Our solutions suit the needs of businesses both small and larger, from start-ups through to mid-tier companies employing up to 1,000 people.”