Best Buys Financial Software Maker Timberline
By ANDREW SIMONS
Irvine-based Best Software Inc. has bought Portland’s Timberline Software Corp. for about $103 million.
Best Software,a unit of the United Kingdom’s The Sage Group PLC,paid about 33% more than Timberline’s stock price of $6.19 prior to the announcement of the deal earlier this month.
Best Software makes software for managing human resource operations at mid-size companies. Timberline makes financial tracking software for construction and real estate companies.
Timberline swung to an operating profit of $658,000 in the first half of the year, versus a loss of $321,000 a year ago. Revenue in the period was $32 million, compared to $28.4 million last year.
The deal is the latest for parent Sage in its bid to boost its U.S. presence. Sage got its foothold in the U.S. when it bought Best Software for $445 million in 2000. The company has made about 45 acquisitions in its history.
Sage will fold Timberline into Best Software but leave day-to-day operations to its U.S. unit. “Sage is a very invisible hand,” said Best Software spokesman Brian Muys.
Sage, which owns several brands in Europe and North America, does all of its North American expansion through its Irvine operation. But, while Best Software counts Irvine as its corporate headquarters, most of the company really is run out of its Herndon, Va., offices.
That’s where many of the company’s executives work. Best Software’s chief executive, Ron Verni, works out of Atlanta. Among Best Software’s top executives, only Chief Financial Officer James Eckstaedt is based in Irvine.
“The headquarters is in Irvine, but it’s really just our legal base of operations,” Muys said.
Best Software’s most recent buys include KTS Group Inc., a Toronto-based developer of fundraising software for philanthropic organizations, which it bought in February, and CPASoftware, a Pensacola, Fla.-based accounting software maker, which it nabbed last September.
The Timberline deal comes as the software industry is undergoing consolidation.
Big deals include EMC Corp.’s pending buy of Mountain View-based Legato Systems Inc. for $1.3 billion. Legato makes database management and backup software. And there’s Oracle’s blockbuster $6 billion bid for rival PeopleSoft Inc., which itself bought J.D. Edwards & Co. two weeks ago for about $1.8 billion.
The trend has generated whispers about the future of several OC companies, including Irvine’s Quest Software Inc.
Royal Bank of Canada analyst Sarah Mattson said EMC might look beyond basic storage software like Legato’s to system monitoring products similar to Quest’s.
The reason for many such marriages in software: grabbing a company’s customer base and cross-selling opportunities.
That’s the case with Best’s buy of Timberline.
“We are looking forward to including Timberline’s customers, management and employees in the Best Software family,” Verni said. “Timberline is the ideal business partner for us to leverage our growth in the construction and real estate markets.”
