CedarOpenAccounts(COA) makes surprise acquisition of Version One

15th April 2007

The news that CedarOpenAccounts (COA), best known for its integrated business, accounting and human resources software solutions is to buy Version One, a specialist in document and image management solutions for the finance function, has taken the market by surprise. However, this is one of those rare deals where customers of both software houses involved and the market as a whole seem set to benefit.

In recent years, Cheshire based Version One has established itself as a leading software vendor in the provision of document and image management solutions to the finance function. With deep integration to all of the leading ERP and accounting systems Version One has successfully carved a niche in 'Purchase to Pay' processing, for example, Purchase Invoice automation. Falling costs of hardware and vast improvements in OCR (Optical Character Recognition) technology have made document management and imaging systems an affordable proposition for companies of all sizes, where it was once the preserve of very large businesses. Workflow capability allied to the efficient electronic storage and retrieval of documents such as invoices has also produced a compelling business case for the technology.

Businesses can also claim 'green' credentials from implementing document management solutions. Version One was a vocal supporter of environmental issues, especially the reduction of non-hazardous waste such as paper, long before 'going green' became fashionable in corporate circles.

For all of these reasons Version One has grown very rapidly and carved a niche as the leading supplier within the finance function. It is this niche status that makes the acquisition slightly unusual.

Tony Bray, Director of Version One told FSN, "As you might expect we have been approached several times by other document management vendors but the deals would not have been good for our organisation and customers. COA has been a major partner of Version One for a number of years and the company will be able to benefit from COA's strategy of growing Version One without changing all the great things about the company, such as our separate identity and friendly, specialist staff."

Mark Thompson, managing director of COA confirmed to FSN that Version One's staff will continue to operate as a separate business unit within the COA group. On the surface, COA stands to gain from Version One's customer base in a highly competitive market, for example, following the acquisition, COA's customer base will exceed 3,000 UK organisations and its total employees will exceed 450.

But Thompson is keen to point out that the deal goes well beyond growing market share. "COA selected Version One because its software adds essential functional capabilities. These capabilities enable customers to electronically design, deliver, store, retrieve and authorise business documents such as invoices and purchase orders, directly from their core finance system."

Thompson, also told FSN that the acquisition is not about persuading Version One customers to change accounting systems. "Realistically speaking customers do not change accounting systems that easily. Strategically, this acquisition increases our access to an enlarged re-seller channel through which we can develop and sell more solutions building on Version One's technology," he told FSN.

COA believes that resellers are one of the keys to competing successfully in the highly competitive accounting and business software market. "The challenge for large software vendors such as Infor, or Oracle is to maintain relationships with the customer. We believe we can successfully add to our growth through broadening our product range and making them available through the reseller channel," he added.

COA which has a group turnover of around £50m and EBITDA of approximately £10m expects the acquisition to push the channel share of group licence fees from 10 percent to around 15 percent post acquisition.

COA and Version One have been partners since 1997 and the companies already have over 250 joint customers throughout the UK including Specsavers, Aer Lingus and The Forestry Commission.

Karen Dicks, director of finance, Specsavers, says, "This acquisition is good news for COA and Version One customers. Specsavers has vastly improved financial processes using a system based on integrated COA and Version One software. This is a natural choice for businesses who want to drive greater efficiencies through an advanced financial management system."

Richard Fisher from COA will become General Manager of Version One. Tony Bray told FSN that the existing management team at Version One will continue to be actively involved with the company and will assist in transitioning the business.