Not satisfied with its status as Africa’s biggest cloud-based solutions provider to the Accounting profession, GreatSoft is setting its sights on Australia and the Unites States in an ambitious expansion effort after making strategic acquisitions. By Gugu Lourie
GreatSoft – the first African-firm to provide fully integrated cloud-based practice management software solutions for accounting and auditing practices – says it plans to grow either by partnerships or acquisitions.
Over the festive season, the South African-based firm snapped up two strategic entities for an undisclosed amount as part of its targeted acquisitions.
GreatSoft bought a 75% stake in cloud-based payrol business Axia from Prosol Group. Axia enables users and administrators to access the payroll and HR information from anywhere. It also provides a browser based employee management system that gives companies secure access to their payroll.
The firm, which has presence in 14 countries, brings to GreatSoft new clients such as Virgin Active, CapeSpan, City Lodge, and KWV.
The acquisition of Axia, will enable GreatSoft Payroll to offer customers and partners the option of either managing and running their own payroll software in-house or totally hosted in the cloud.
It will also allow GreatSoft’s clients such as Nolands Africa, Grant Thornton, Mazars and Moore Stephens to generate new sources of revenue through cloud-based payroll services.
In December 2015, GreatSoft also snapped up a 75% stake in PaperFreeWeb, a South African cloud-based document management and scanning solution company to create GreatSoft Document Management business, which aims to target opportunities in Africa.
PaperFreeWeb offers a range of solutions from electronic document management, filing and tagging. It merges many aspects of the digital office and provides a one stop solution from uploading electronic document to the cloud in 60 seconds to full bureau services.
GreatSoft Document Management will compete directly with Metrofile, a JSE-listed document provider that store volumes of physical records in a store room.
In the next few years, a paperless society where electronic information is stored in a cloud will become one of the biggest competitive advantages a company can have.
GreatSoft is aiming to benefit from this transition by buying PaperFreeWeb and is likely to be ahead of firms like Metrofile, which is still trapped in a legacy business of storing documents in a store room.
Bruce Morgan, the CEO of GreatSoft, said the transactions would enhance the company’s earnings.
“GreatSoft is buying strategic capability that will position the company well in the market to retain and secure new clients,” said Morgan.
The tech firm has operations in 18 African countries and boasts clients such as Deloitte, EY and KPMG.
Its appetite for shopping seems unabated. It has hinted at making more acquisitions.
“We have appointed a very experienced business consultant in Australia to assist with these plans. We have a long history of dealing with Australia,” says Morgan.
“We have distributed their products in our country and we own a small software business in Australia. We are looking at expanding into that market and we hope to conclude a deal by end of June.”
Morgan added the deal could be more than a distribution deal, maybe a partnership or even a business acquisition.
“The business is substantially and bigger than ours. It might mean a reverse takeover. But definitely our eyes are firmly on Australia.”
The company also wants to venture into the US market, which has seen some big South African corporates coming back without cracking that tough market. The tax and accounting space in the US is dominated by big players.
The revenue of the accounting, tax preparation and payroll services industry in the US reached about $137 billion in 2013 and by 2018 is expected to generate around $160 billion, according to research firm Statista.
Morgan is confident that GreatSoft can crack the US market by entering the country through a partnership that will operate as a distributor rather than setting up a new branch.
“That will do few things. We won’t go to all the States. We will tackle one State at a time. If we can dominate one State the business will be as big as the whole South African business.”
He said the company together with its partners in the UK have identified a business in the US, which has a legacy product and no cloud-based solutions.
Morgan explains: “For them to migrate to GreatSoft would be really a marriage made in heaven. We already had numerous discussions. I am going to the US as early as June to see how we can pursue that transaction.”
Should Morgan pull off the Australia and US deals, he’ll have gone a long way to achieving GreatSoft goal of being an international player and not just an African firm.
When asked whether pursuing big transactions in Australia and US will force the company to raise cash through a listing, he said the company had zero debt on its balance sheet until it took a loan from FNB to finance a portion of its transactions.
“For now, our working capital requirements for the next two years, we actually don’t need to raise any additional funds. If we decide to go-ahead with the US acquisition, then we might require additional funding,” said Morgan.
“Then, we would have a choice of either going for private equity or to raise funds via a potential listing.
“Our personal preference at this stage is not a listing, but to rather use private equity of which we now have enough connections via the world-renowned Endeavour Entrepreneur Experience Network that has sufficient people that we could touch on the shoulder to help fund that without the need to actually list.”
Last year, GreatSoft was chosen as the winner of the First National Bank Business Innovation Award and as the recipient Morgan became a member of the Endeavour Entrepreneurs.
The list of South African Endeavor Entrepreneurs includes Adrian Gore of Discovery, Vinny Lingham – who sold his virtual gift card service, Gyft, for $52m – and Taste Holdings’ Carlo Gonzaga.
With its footprint spanning 18 African countries and 40 000 daily users of its public cloud solution, GreatSoft may stand a chance to fulfilling its mission to be a global player but it’s going to be tough.
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The country needs more companies like GreatSoft and I must add Adapt IT. Good luck team GreatSoft on your expansion into the US and Australia. Take along youngsters to conquer the world.
Thanks David, AS South Africans we don’t often give ourselves enough credit but we have a fantastic country and great potential with the young guns coming through to drive our businesses for the future