Australian software company Reckon’s sale of its practice management software Reckon APS and Reckon Elite to UK-founded The Access Group for $100 million last week sent shockwaves through the industry. When Reckon bought APS in 2014 the software had already established itself as the default platform for Australia’s largest accounting firms. The sale to The Access Group saw Reckon’s stock climb 45%.

The Access Group, which has been on a spending spree across the Asia Pacific over the past three years – acquiring on-premises ERP Attaché, inventory management platform Unleashed and a mix of payroll and HR software – plans to integrate the cloud modules built by Reckon APS with its Platform as a Service (PaaS) product Force.com.

“In the next 12 months we'll have a complete, end-to-end cloud native suite,” says president of The Access Group Asia Pacific, Kerry Agiasotis.

“Our whole ambition here is to really be the first end-to-end, cloud native suite player. That's what we're accelerating to.”

Pictured: Kerry Agiasotis, president of The Access Group Asia Pacific

“Our whole ambition here is to really be the first end-to-end, cloud native suite player. That's what we're accelerating to.”

The Access Group has built an online integration platform called Access Workspace that enables the integration of its applications. Accounting firms using Reckon APS, Elite or HandiSoft, for example, could connect to HCM, HR, payroll, workforce management, ERP, and ecommerce applications.

“It makes those applications available to our broader customer base,” says Agiasotis.

Competitors on alert

The Access Group's latest acquisition marks its growth in APAC and positions it as a competitor to Australian and New Zealand cloud accounting heavyweights MYOB and Xero.

In 2018, MYOB Group scrapped a planned $180 million purchase of Reckon's accounting practice management software business after the regulatory process took longer than expected.

At the time, the Australian Competition and Consumer Commission was unhappy about the planned takeover, concerned Reckon would become the sole supplier of practice software suitable for medium to large accounting firms.

The Access Group’s acquisition of Reckon, which provides Reckon APS firms with a faster route to a cloud-based alternative, occurs a year after MYOB bought GreatSoft, a cloud practice management system from South Africa.

Xero has also won over several APS firms with Xero Practice Manager combined with document and process management tool FYI Docs.

A good deal for everyone

Reckon chief executive Sam Allert says the deal “makes a lot of sense for everyone,” and says Reckon can now return to its roots as an accounting and payroll software business.

“Lots of people have said APS was the jewel in the crown, but Reckon’s heritage and identity has always been small business accounting and payroll,” Allert tells Acuity.

He says Access has the same strategy of moving to the cloud and will support APS on-premises version.

“Our strategies were very similar,” he says. “And that is, we both have been committed to getting full cloud solutions in the market. That's the number one focus.

“That said, we have a wonderful, loyal client base using our on-premises desktop products, and we weren't going to force them off those products until the right time. The right time is at least two, and maybe more years down the track,” he says.

“We obviously want to deliver brilliant new cloud products and we want everyone to upgrade, but we weren't going to force any migration,” Allert adds. “I don't want to put words in Kerry's or Access's mouth, but I understand their intent to be very much supporting that APS suite going forward and very much just continuing to complement the APS product with that cloud journey.”

Pictured: Sam Allert, chief executive of Reckon, and Kerry Agiasotis, president of The Access Group Asia Pacific

The future for Reckon

While Allert says Reckon will continue investing in Reckon One, which has 114,000 users and generates $39 million in revenue, it has decided not to use the funds from the sale to accelerate the development and customer acquisition for Reckon One.

“We're investing well already into the business, we're getting good traction and it's cash flow positive,” he says. “We've already got levers we can pull in that business for more investment.”

While some of the proceeds from the sale would go to paying down Reckon’s $16 million debt, the bulk of the $100 million would be paid out as a special dividend “to reward shareholders”, Allert says, adding the terms of the sale do include the staff in the Reckon Accountants Group in Australia and New Zealand moving over to The Access Group.

Allert says Reckon will continue to add features to Reckon One and integrate solutions such as payments, salary advances and reward systems. Reckon still sells desktop accounting software Reckon Accounts, based on the desktop software Intuit QuickBooks, and Reckon Accounts Hosted, accessed online via the AWS platform.