Reckon divests accounting division to The Access Group in $100m deal
Reckon will return the after-tax sale proceeds to shareholders via a special dividend.
Cloud-based accounting software provider Reckon (ASX: RKN) has agreed to divest its accountants practice management group for $100 million to subsidiaries of UK-based The Access Group.
The sale to Access Software Australia, Access Workspace NZ and Access UK covers the sale of assets used by Reckon’s group, including the APS and Reckon Elite practice management products.
The sale price represents a multiple of 4.6 times the group’s revenue for the 2021 financial year and 8.4 times the group’s EBITDA (earnings before interest, taxation, depreciation and amortisation).
Reckon plans to return the majority of proceeds from the transaction (post taxes) to shareholders through a partially-franked special dividend.
The sale of Reckon’s accountant practice management group follows the $13 million divestment of the company’s ReckonDocs business in early 2021.
Completion of the sale is subject to regulatory approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board, and customary closing conditions.
Cloud-based business
Once the sale is complete, Reckon will remain a focused, cloud-based company with exposure to high-growth markets in Australia and the US.
It will retain its business group (which provides accounting and payroll software for small to large businesses and personal wealth management solutions) and legal practice management group (focused on practice management and workflow solutions to US law firms).
These groups generated a combined $50 million in revenue and $17 million in EBITDA from Australian and US markets in the 2021 financial year, representing 70% and 60% of Reckon’s pre-transaction revenue and EBITDA respectively.
Global market opportunities
Chief executive officer Sam Allert says Reckon’s remaining businesses are well-positioned to take advantage of strong global market opportunities for cloud-based products.
“We believe we will be in a stronger position to focus on and invest in the growth and development of our business and legal groups with this sale,” he said.
“We plan to build on our 114,000 cloud users, to expand our suite of accounting and payroll cloud solutions and continue to help small businesses turn ambition into accomplishment, as well as pursue practice management opportunities in the global legal market.”
Mr Allert said Reckon would continue to operate the accountants practice management group until completion of the sale.
It will work closely with The Access Group to ensure a seamless transition of ownership for staff and clients and provide certain services for a period of time following settlement.