14th May 2013. MYOB Holdings Pty Limited (“MYOB”), today announced that one of its subsidiaries has signed an agreement to purchase bank transaction data firm BankLink from Media Transfer Services Limited (MTS).
BankLink automates and streamlines the accounting process for over 4,500 accounting practices and 320,000 small business clients across New Zealand, Australia, and the UK. MYOB will acquire the BankLink business for NZ$136m ($A113.88m) to be funded by NZ$75m senior bank debt, with the balance funded by an equity funding from MYOB’s shareholders. The sale and purchase agreement is subject to a number of conditions including regulatory and third party consents. The acquisition is expected to be completed in June 2013.
BankLink provides accounting practices with reliable, timely, and accurate client transaction data from over 100 financial institutions along with a range of software tools tailored to the needs and accounting abilities of small businesses. Each month, it securely delivers in excess of 13 million customer transactions from more than 100 banks, credit unions, brokers and fund managers.
MYOB advises that the performance against its senior bank debt and MYOB Notes covenants improves as a result of the acquisition, due to the reinvestment of NZ$61m of equity funding by MYOB’s shareholder and the contribution of the earnings of the BankLink business to MYOB’s earnings. The purchasing MYOB entity is MYOB Finance NZ Limited, which is a subsidiary of MYOB Holdings Pty Limited, the parent entity of the MYOB Group.
For the 12 months ending 31 December 2012, the MYOB Group generated A$218.1m in revenue (FY11 A$204m), A$107.5m in covenant EBITDA (FY11 A$101m). It recorded EBIT of A$30m, PBT of -A$22m, and NPAT of -A$14.8m.
As at 31 Dec 2012, MYOB’s assets included Goodwill of A$740m and A$455m of intangibles. Liabilities included A$408m of senior debt and A$155m of Subordinated Notes. Its total leverage (senior net debt + subordinated notes / EBITDA) was 5.45 times.
BankLink’s European business does not form part of the acquisition. The growing United Kingdom based operation, soon to be renamed “Bankstream”, will be retained by BankLink director Derek Jones. It will be supported by a dedicated development and operational team based in Auckland.
MYOB and BankLink are market leaders in the provision of business management solutions to SMEs and accountants in New Zealand and Australia, and offer highly complementary solutions. This acquisition is a key strategic move that will leverage the strengths of both organisations, and position the new entity to lead the next wave of industry growth – cloud accounting. MYOB’s SME solutions empower businesses to run their own accounting system, and BankLink enables accountants to do the accounting on behalf of the business.
The combined entity will have the most comprehensive set of accounting solutions in the market today. This includes MYOB’s flagship cloud accounting solution AccountRight Live, its entry level online accounting solution LiveAccounts and BankLink’s market leading accountants’ solution BankLink Practice. All solutions will be powered by BankLink bank feeds, known for being secure, reliable and accurate; essential requirements for successful cloud accounting solutions. Having the most secure and accurate bank feeds available is a distinct competitive advantage in delivering MYOB’s cloud strategy. Sales of MYOB’s cloud accounting solutions now make up one-third of all new product registrations, almost three times higher than last year.
MYOB Chief Executive Officer, Tim Reed said “Key to the success of MYOB’s online strategy is its partnership with accountants in practice. The coming together of MYOB and BankLink allows accountants to recommend the most appropriate accounting solution for each and every unique client. In addition, we can now further enhance this partnership by having more team members on the ground focused on accountants in practice and supporting their success.”
“Accounting is going through a period of rapid innovation. Cloud solutions are replacing desktop applications; bank feeds are a key component of a cloud solution, as they are used as source data for the accounts. The benefits of automatic bank feeds are huge; they significantly reduce the time it takes to do the books. If you are running a small business, it is essential to have accurate financials. BankLink has proprietary methods of supplying accurate, reliable and secure bank feeds that are more accurate and secure than others.”
BankLink‘s General Manager Operations, Richard Reese, said “We are delighted that BankLink will become part of an iconic and reputable business that has a strongly aligned and clear vision for the future. We look forward to future success as part of MYOB.”
Craig Boyce, Managing Director of Bain Capital, MYOB primary shareholder said “The acquisition of BankLink is highly strategic; the competitive advantage provided by their integrated bank feeds is key to MYOB’s cloud offerings. We look forward to further supporting and investing in MYOB’s growth and product development in the coming years.”
About MYOB Group
Formed in 1991, MYOB is a leading provider of business management, accounting, payroll and tax software in Australia and New Zealand, supplying its software, services and support to small and medium sized enterprises (“SMEs”) and public accountants. MYOB’s solutions extend online, delivering innovation through cloud accounting solutions such as LiveAccounts and the November 2012 launched AccountRight Live.
MYOB listed on the ASX in 1999, and was delisted after a A$451m takeover by private equity firm Archer Capital in December 2008 in a protracted and public battle that saw its long time CEO, founder and major shareholder Craig Winkler depart.
In August 2011 Archer sold MYOB to Bain Capital for A$1.2bn with considerable publicity as a result of a failed bid from Sage Corporation which has resulted in litigation.
In December 2012 MYOB raised A$155m in finance through the offer of MYOB Subordinated Notes, to optimise the capital structure and create a pool of capital for investment, acquisitions or capital return. This transaction required the ASX-listing of a wholly owned subsidiary and special purpose vehicle of MYOB Group, MYOB Finance Australia Limited under the code MYB. It is a directly held, wholly owned subsidiary of MYOB Holdings, the parent entity of the MYOB Group. The net proceeds of the Offer was to be used to partly repay some of the Senior Debt (A$53.8m) was used to finance the acquisition of MYOB and also to make a return of capital (A$90.2m) to the Shareholder of MYOB Holdings (who is outside the MYOB Group).
MYOB estimates it currently holds a market share of approximately 60–70% for SMEs and approximately 60–70% for public accountants, by revenue from sales of these products and services in Australia and New Zealand. MYOB commenced operations over 20 years ago and now supports nearly 1 million businesses, predominantly SMEs, and more than 40,000 accountants across Australia and New Zealand. MYOB employs more than 900 staff and is headquartered in Melbourne, Australia.
BankLink, as part of the Media Transfer Services (MTS) company, was founded in 1986 in New Zealand by Malcolm MacDonald, Derek Jones and Steve Agnew. The original aim was to provide a time-saving service to accountants and their small business clients. For 25 years BankLink has been providing easy to use accounting solutions that deliver better efficiencies, improved communication, and increased profits for accounting practices and their clients. BankLink won the 2012 AUT excellence in Business Support Award, in the WHK Large Business $10 million to $50 million turnover category; the ‘Most Innovative Approach to International Business’ award by New Zealand Trade and Enterprise; and was a finalist in the PricewaterhouseCoopers ‘Hi-Tech Company of the Year’ and the 2011 ‘NZ Hi-Tech Awards”.