K3 boosts Sage client base with fresh swoop

SOFTWARE supplier K3 Business Technology Group has made a second acquisition in as many months.

The AIM-listed Salford-based company is buying FD Systems’ Sage 200 business unit for up to £1.25m. Of this sum, £950,000 is payable now and £300,000 at the end of February.

The Sage 200 business unit delivers the Sage Line 200 suite of business management software, which provides small and medium-sized companies with a complete enterprise resource planning (ERP) solution.

K3 said the assets it is buying generates annual revenues of £2.35m and a profit contribution of £500,000. More than 40% of its annual income is contracted recurring revenue, generated by licence renewals and support. It has around 330 customers.

K3 said it would integrate the acquisition with its newly-established  Sage operations, which were acquired last month with the purchase of Panacea, a provider of managed services and IT solutions to Microsoft and Sage users.

Chief executive Andy Makeham said: “The acquisition of FD Systems’ Sage 200 business unit is a very good one for us and will be easily combined with our existing Sage business, which it complements. 

“Importantly, the acquisition brings us additional annual recurring income and very good cross-selling opportunities. 

“The acquisition materially increases the number of Sage customers we have under maintenance and as we seek to unroll K3’s hosting and managed services offering across our existing 1,500  strong customer base, the addition of this new customer base increases our readily addressable audience. 

“With the development of our hosting and managed services business a major focus of our growth strategy, the addition of a new customer base is valuable and should help to increase our contracted recurring income, which currently stands at some 40% of the group’s annual income.”

K3 was supported by in the deal by Richard Faulkner, relationship director at Barclays Corporate in Manchester.