Sage places it bets on Brazil

Sage is still the subject in the latest of the regular round of acquisition rumours (including the more innovative one which suggests it could sell off its US business), but rather than making a sale it has made a double acquisition to expand its Brazilian interests.

It boosted its Brazilian presence with its Folhamatic acquisition in June (see here) and has used the subsidiary to acquire EBS (Empresa Brasileira de Sistemas), a provider of accounting, business management and tax software, for up to £10.6m in cash. For that it gets EBS’s 4,000-strong customer base, (c2,300 accounting firms, c1,700 other businesses). It also used Folhamatic to buy Cenize Informática, paying up to £3.9m in cash. Cenize provides accounting software to c7,000 small and micro businesses in Brazil.

Both acquisitions are in its core area of expertise and conform to the acquisition guidelines it laid out a couple of months ago (see Is Sage still relevant? for our analysis of its business strategy) whereby they have to have the potential for high growth and/or take Sage into a new market. Brazil is still fairly new ground for Sage and as HotViews readers will know from Anthony Miller’s posts (see Brazil: Opportunity for some! for example), it is a growth market. Brazil could drive growth for Sage but it will have to do more than replicate its traditional strategy of buying companies and running them as independent local businesses - it needs to invest, integrate and bring global development and economies of scale to bear. It is early days for its Brazilian business and its new strategy – Brazil should be the acid test of its flexibility and execution skills.