Having consumed the Sage 200 (see here) and Clarita Solutions (see here) business areas of FD Systems Ltd, ERP and managed services provider K3 has now acquired the rest of the Sage and ecommerce-based business and will pay £2.23m cash upfront with additional sums to be paid if conditions are met.
It will be integrated into K3’s Sage division and is expected to bring £7.0m in additional revenue and an underlying profit of around £750,000. It looks like a reliable business given that 41% of its annual revenues are contracted recurring revenues from its 300 UK and Ireland customers (which include United Utilities Group, Ideal Shopping Direct, and Chubb). K3’s Sage business now has over 750 customers, making it one of the largest Sage partners in the UK.
K3 also gains FDS’s in-house developed e-commerce solution Gravit-e, so the acquisition adds to its application portfolio as well as its skills and customer base. As the ecommerce product integrates with Sage and Microsoft products, the benefits of the deal can be extended to K3’s Microsoft business division, thereby providing additional value within K3.
The company is highly acquisitive at the moment and is building critical mass in the Microsoft (Navision) and Sage partner ecosystems. This makes a lot sense given that Microsoft and Sage are the most notable vendors within the highly fragmented ERP mid market areas. If K3 can align its managed services business with its ERP lines, it should be able to establish a strong position for itself in the burgeoning mid market and rise above the many other Sage and Microsoft partners operating in the UK.