Following the struggles of the last financial year, which included a 17% slump in revenue (see here), Microgen is to undertake a strategic review over the coming months. Although it says the current strategy and structure is a viable option, it will be taking a wide ranging review of the business that “may, or may not, result in the disposal of one of both of the operating divisions.” It will also consider whether acquisitions are appropriate.
Scrutiny must surely fall on the mature Financial Systems Division, which for all its high margins is not a growth business. We note that Vista Equity Partners has been busy buying in the UK FS sector – e.g. Misys and Thomson Reuters (see here). Meanwhile, there is growth potential for Microgen’s business process-centric Aptitude Solutions Division because of the growing market demand for process management to improve operations and visibility across organisations. The company had already started to restructure the division by the end of the last financial year, shifting the business mix towards licenses and recurring revenue and reducing reliance on consulting revenue.
Current performance of the overall business is strong enough that the company does not have to rush into anything so the review is expected to take several months. We will keep you posted.