Bain Capital has won the auction for Australian business software group MYOB, fending off rivals Kohlberg Kravis Roberts and Sage, the UK software maker, after a late-stage battle.
The US private equity group did not disclose financial details on Sunday when announcing it had agreed to buy MYOB – which stands for Mind Your Own Business – but two people close to the transaction said its offer price was A$1.2bn, including debt.
Sage had been the preferred bidder with an offer of about A$1.3bn, but ran into trouble because a fall in its share price meant the acquisition could have represented more than 25 per cent of its market value and would therefore require a shareholder vote. It was not clear that Sage could count on the support it would need from shareholders.
“The big issue for Sage was certainty of deal execution,” one of the people said.
Bain’s offer was pitched at 11.3 times MYOB’s earnings before interest, tax, depreciation and amortisation last year. That compares with a multiple of about 12.5 times paid by KKR last year when it bought Visma, a Nordic software group.
MYOB is the latest in a string of accounting software companies to be sold, including Iris Software, Computer Software Group and Addison Software.
Bain last year sold TeamSystems, an Italian software business similar to MYOB, to a rival private equity group also for a multiple of 11.3 times.
The failure to secure MYOB is a blow for Sage, which has pursued a number of software companies only to be outbid by private equity groups. It would have been the first successful takeover for Guy Berruyer, who took the helm as Sage chief executive last year.
Bain needed a large group of banks to help fund its takeover of MYOB, which it is buying from Archer Capital and HarbourVest Capital. Its financing team includes Deutsche Bank, HSBC, National Australia Bank, Nomura, UBS, Westpac and Morgan Stanley, which also advised Bain.
UBS advised Archer Capital on the deal
Walid Sarkis, a Bain Capital managing director, said MYOB was a “first class company with an attractive valuation”.
“It has been the leader in the financial software space for SMEs [small and medium enterprises] in Australasia for a very long time with a strong proposition focused on customers’ needs. The growth potential in this market is strong, with a growing trend of entrepreneurs starting up their own businesses,” he said in a statement.