UK Software Firm Buys U.S. Payment-Processing Company

Sage Group, a business software firm based in England, on Monday announced the $323 million purchase of Verus Financial Management, the Nashville-based payment processor.

The purchase expands Sage's reach beyond accounting products and into credit card and check processing for small and medium-sized businesses. Sage, which is Britain's largest listed software firm, announced it was buying Verus from Financial Technology Ventures and other shareholders for $323 million in cash, including debt.

“For our existing customers, Verus will provide merchant payment services that can be linked to their existing Sage accounting software,” said Sage Software CEO Ron Verni. “For new customers, these new payment services, in addition to our payroll services and customer relationship management products, further broaden the appeal of Sage solutions beyond pure accounting.”

Finance Director Paul Harrison told Reuters that Sage's existing payroll services operation supports more than 1 million small to medium-sized enterprises, or SMEs, in the U.S. "We've been trialing merchanting services to SMEs for some time and seen there's been quite a strong interest in the U.S.,” he said.

In an interview with AFX News, Harrison said its new payroll services would lift some of the administrative burden off SMEs. Sage's customers have been asking for a way to link payment processing with accounting software in order to eliminate dual data entry, the company said.

Analysts had mixed reactions to the news. Cazenove analysts Stacy Pollard and Sarah McKenna, said in a research note, “We view this as a smart move into a growing market, and one which provides significant cross selling opportunities in both directions.” UBS, on the other hand, said the purchase was “an expensive step out of Sage's core competency.”

Verus has a base of 101,000 customers in industries such as retailers, gas stations, car dealerships and restaurants. Its revenue for 2005 was about $64 million, according to Sage, which represents a growth of 26 percent over the prior year.

George O'Connor, software and computer services analyst at Shore Capital, said, “This is Sage's largest acquisition since 2001 and is about 5.1 times earnings valuation/sales. However, it gives Sage access to a very attractive market and allows them to sell more services to SMEs.”

Harrison also said the company may expand the service to European customers in the future. Sage is looking at additional purchases in countries where it is not a major presence, such as Italy, Scandinavia and in the Middle East, he said.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.