West Midlands-based Retail Systems Group provides Microsoft Dynamics retail management systems (RMS), which offers small and medium-sized retailers point of sale services. It has customers including Aston Martin, Triumph and the National Portrait Gallery.

Under the terms of the deal an initial consideration of £1.28 million is payable on completion, with a subsequent amount of approximately £1.5 million due in respect of surplus cash in the business at completion.

An additional earn-out of up to £200,000 is also payable over the next two years, dependent on certain performance criteria.

Andy Makeham, chief executive of Manchester-headquartered K3, comments: ‘RSG represents another excellent acquisition for K3. We already have an established business delivering retail software solutions to mid-tier retailers and RSG will extend our reach into the substantial small retailer market.

‘In addition, it brings us strong recurring revenues, including from managed services, from a large, high quality customer base.’

According to a statement the purchase gives K3 access to the ‘significant’ market for smaller retailers, which is said to complement its existing mid-range retail software offering.

K3’s December M&A activity has included deals for Integrated Business Systems for up to £1.6 million and Unisoft BV for £2.4 million. Its total acquisition count for 2011 now stands at seven.