10 November 2005 Accounting software maker, Geac, is to be acquired by private equity group Golden Gate Capital for roughly $1 billion, in a deal that underlines the intense competition in the business software market.
Geac, whose customers include UK high street retailers Woolworths and fast food group KFC, admitted in August 2005 that it needed to acquire or be acquired in order to grow its business.
The admission was made against a backdrop of intense competition among enterprise resource planning (ERP) software makers. Rival Oracle sparked a bout of market consolidation through its acquisition of PeopleSoft, while Microsoft moved into the lower end of the market.
Meanwhile, Geac has relied on acquisitions to drive revenue growth over the last decade, but can now no longer afford this strategy. In 1999 it bought JBA and its System21 product line to break into the AS/400 market and in 2003 it purchased Comshare – one of the oldest software companies in the US – in a $52 million deal.
“For our customers and employees, this proposed transaction and the resources available through it provide a long-term future for our business,” said Charles Jones, president and CEO of Geac.
Golden Gate has a history of buying software companies using its ‘assembler’ acquisition strategy – a method it has used for integrating companies such as Concerto/Aspect software and Infor. David Dominik, managing director of Golden Gate Capital said: “The technology businesses we acquire are carefully selected based on their growth potential and ability to deliver vertically specific enterprise offerings and deep market expertise to their customers.”
The deal which values Geac at roughly $1 billion, is subject to approval of the regulators, but is expected to close in the first quarter of 2006.