Software companies are facing up to the recession. James Harris talks to CEO and founder of Access Accounting, Alistair O’Reilly
Software companies are facing up to the recession. James Harris talks to CEO and founder of Access Accounting, Alistair O’Reilly
‘The credit crunch has been a bit of a disappointment,’ admits Alistair O’Reilly, CEO and founder of software provider Access Accounting. It is not the scarcity of finance or a failing market that has let O’Reilly down, instead he ‘hoped we could find significant opportunities for acquisitions in the downturn, and it just hasn’t happened.’
Access has performed well in the downturn, which O’Reilly puts down to the firm’s recurring business, as it charges for the support and maintenance of its software. He is also unusually bullish about the market: ‘I suppose it is a good thing that the software industry has proved impervious to this downturn, but it does mean that the companies we’re interested in are not for sale.’
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Access started life in 1991 providing accounting software to businesses. After making its first acquisition in 2004, Access Supply Chain, the company has made four others and generates a turnover of £23 million.
‘In the first 12 or 13 years, we relied purely on organic growth, after which growth came internally but also from acquisitions.’
Slowly but surely, the company built up its resources to make deals: ‘We are continually reinvesting in the business. We financed every acquisition from traded cash flow or deferred payment to the seller. We’ve never had a loan. We’re fortunate because it’s a cash-generative business, so if we marshall our reserves, we can fund acquisitions.’
Although Access has had a smooth run when it comes to finance, there have been problems along the way. ‘In our acquisition of Access Supply Chain, the first for the company, we thought we had a lot to offer because we were a much bigger business. We lost sight of the fact that we bought the business because it was successful. The acquirer can learn as much from the target as the other way round. A little less arrogance would have gone a long way.’
The economic downturn has also given the company a bit to chew over: ‘Cash collection for the business became a bit more unreliable in December, so we had to put a stop to making further acquisitions. We held our breaths for four months.’
After the short hiatus, Access is back on the lookout for acquisitions: ‘We have irons in the fire. We are looking at one or two deals this year with a view to closing at least one by the end of the year.’
