The last time MYOB acquired software or services it bought the company outright. Financial data aggregator BankLink, which supplies bank feeds to the MYOB AccountRight and MYOB Essentials ranges, has been integrated into the accounting software itself and the service rebranded as MYOB BankLink.(Update: MYOB also acquired cloud document collaboration startup Dovetail in late May.) The Kounta investment in contrast is not even a controlling stake. The cloud POS vendor had several offers for investment and chose MYOB for access to its sales channel of 40,000 partners and 1.2 million customers. “We’ve proven Kounta out in all sizes of businesses, from hole-in-the-wall cafes to high volume outlets and multi-outlet franchises,” Nick Cloete, CEO of Kounta, told BoxFeeIT. “All our acquisitions have been organic. Now its time for Kounta to spread its wings and from a good, solid platform.” Kounta will continue to sell the POS app as a standalone product that integrates with competing accounting programs in Australia and New Zealand, and in the rest of the world. MYOB didn’t have any means of supplying bank feeds itself so the BankLink acquisition made sense.
MYOB already has retail programs that have sold well for several years. While Kounta will initially be sold alongside MYOB’s desktop and server-based programs in retail, it will gradually become the vendor’s first recommendation. “As time goes by the trends show this will become the lead product,” Andrew Birch, MYOB product manager, told BoxFreeIT. MYOB is effectively admitting it is better to have a best-of-breed solution under a white-label arrangement than miss out or stretch its developer resources by trying to build everything in-house. (MYOB Kounta is not a straight white labelling exercise as it will have tighter integration with MYOB and other features, MYOB says.) The investment is also a tacit sign of support from Bain, MYOB’s owners and the biggest private equity company in the world. It’s fair to say that the relationship between Bain and MYOB got off to a less than smooth start. The price Bain paid previous owners Archer Capital ($1.2 billion, triple the price Archer paid two years earlier) was an enormous valuation given the company had yet to release any cloud software. Bain couldn’t have known how big a threat Xero would become in such a short time, and its rival’s rise has devalued the existing MYOB desktop software range.
Intuit and now MYOB are opening up their wallets to invest in proven companies. It’s great news for accountants, bookkeepers and SMEs because cutting-edge technology will find its way to market faster, kicking along the cloud-led productivity boom. It will be interesting to see whether Xero chooses to respond by taking a piece of Vend, the other well-known cloud POS and a long-time Xero partner. On the one hand, MYOB’s plan to offer a tightly integrated cloud POS, accounting program and hardware bundle will be attractive to retailers wanting a single-branded solution. Xero will feel the urge to compete. But on the other, Xero Australia is focused on getting its tax platform out and HQ is busy establishing its US beachhead. POS is probably not top of the agenda.
The article first appeared in Digital First online