It’s been a busy time for K3 Business Technology Group. The company has just closed its third acquisition of the month (see K3 buys a bit of Maxima and K3 goes Dutch again with Unisoft), this time taking on Retail Systems Group Ltd (RSG), a Microsoft Dynamics provider
The retail capability will slot right into K3’s portfolio and add a small business dimension (and around 200 customers) to complement its existing mid market retail products but will also expand K3’s managed services division because RSG has an operation in this area. This should please non-exec director and shareholder Per Johan Claesson, who has launched a bid for the company, wanting to see K3 make a faster transition from ERP VAR to SME host provider (see Claesson looks to K3 for hosting panacea).
K3 is putting up £1.28m in cash on completion, with an additional c£1.5m in respect of surplus cash. Last year (ending June 30 2011), RSG posted an operating profit of £300,000 on sales of £2m. So K3 is taking on a business that will add to its own operating profit. The sum may not be huge, but every little helps especially in the hard-pressed retail market. RSG operates to a similar business model as K3 (selling more to the existing customer base and reaping the rewards from managed services) and has around 40% of recurring annual revenues equally split managed services and maintenance/support. Another 35% of annual revenues are derived from additional sales to existing customers.