MYOB has acquired smaller New Zealand-based rival BankLink for 136 million New Zealand dollars (US$113 million). / Takeover opens floodgate, says rival, Accounting software competitors Xero and MYOB are at odds over who will benefit from MYOB's acquisition

Gillian Tan of the Wall St. Journal writes: Bain Capital-backed accounting software maker MYOB has acquired smaller New Zealand-based rival BankLink for 136 million New Zealand dollars (US$113 million).

Bain Capital managing director Craig Boyce said in a statement that the acquisition of BankLink would provide MYOB with a competitive advantage in the space of cloud accounting. Sales of MYOB’s cloud accounting products make up a third of the firm’s new registrations, triple their contribution from this time last year.

BankLink, founded in 1986, owns services that are used by more than 320,000 small businesses and 5,000 accounting practices throughout Australia and New Zealand. It facilitates more than 13 million transactions a month between financial markets participants like banks, fund managers and credit unions.

Bain and funds advised by the buyout firm bought MYOB from a consortium including Australian private equity firm Archer Capital and international asset manager HarbourVest Partners in 2011 for around 1.2 billion Australian dollars (US$1.2 billion).

MYOB estimates that its current market share of Australia and New Zealand small-to-medium enterprises and public accountants is between 60% and 70%. Its earnings before interest, tax, depreciation and amortization, or Ebitda, for the calendar year ended Dec. 31 was A$107.5 million from A$218.1 million of revenue.

Takeover opens floodgate, says rival

TOM PULLAR-STRECKER for Stuff.Co.Nz writes: Accounting software competitors Xero and MYOB are at odds again, this time over who will benefit from MYOB's $136 million acquisition of Auckland software firm BankLink.

MYOB yesterday prevailed in its second attempt to buy BankLink from the three entrepreneurs who founded firm it 27 years ago.

MYOB sells accounting software in Australia and New Zealand, in competition with the likes of Xero, whose founder, Rod Drury, anticipates the takeover will benefit the Wellington-based firm.

customers into its arms.

"We are flipping lots of BankLink customers at the moment," Drury said, "but this really opens up the floodgates."

MYOB chief executive Tim Reed responded that the purchase was "a win" for BankLink and MYOB clients. "I can't understand how it could be seen through a different lens."

BankLink employs 150 staff and sells software that automates the provision of bank feeds, so accountants in New Zealand, Australia and Britain do not need to manually rekey the details of bank transactions when preparing accounts for their clients.

It can also automatically feed transactions into MYOB's cloud-based accounting packages, which are used by small businesses that want to put together their accounts themselves.

Reed said was a "strategic move" that would position MYOB to lead the next wave of growth in cloud accounting.

It still relied on "screen-scraping" software to input transactions from some bank account types into its cloud-based software, but this resulted in lower-quality data with a risk of duplicating transactions.

Also, if a third party was preparing the accounts, the small business would have to hand over its online banking user name and password.

"The moment a business owner gives up their user name and password, generally they have breached their online banking agreement and that puts them in danger the banks won't cover them if there is fraud," Reed said.

Drury said that was "misinformation" as Xero customers were able to directly feed bank transactions into Xero in 95 per cent of cases.

The option was available for "all major Australian and New Zealand banks", but Xero provided a screen-scraping option, which had "never been hacked", for use with smaller financial institutions, like building societies.

Xero had spent a few years matching BankLink's capabilities and although BankLink's feeds were probably slightly more comprehensive, Xero was about to leap-frog ahead, Drury said.

"We are working with most of the major banks on the next generation of banking web services which will provide much more than bank feeds. I think is one of the reasons BankLink sold. The founders ... have chosen to take the money while they can."

BankLink was principally owned by founders Malcolm MacDonald, Derek Jones and Steve Agnew. MYOB had agreed to buy its business in New Zealand and Australia, Reed said, but Jones would retain and run BankLink's British offshoot.

The Australian Financial Review reported in 2011 that MYOB's then majority owner, Australian private equity firm Archer Capital, planned to buy BankLink and fold it into MYOB. But it said the deal broke down because Archer was only willing to pay $100m.

Archer subsequently sold its stake in MYOB.

Xero shares closed down 3.5 per cent at $13.31.