Irvine’s Sage Software Inc., Orange County’s largest software maker by sales, is taking a breather after an acquisition binge.
“Right now we are digesting a little bit,” Chief Executive Ron Verni said. “We made so many acquisitions in the last year.”
Sage, part of Britain’s Sage Group PLC, has bought eight companies since the start of 2006.
The company, which makes software to streamline human resources and accounting for small and midsize businesses, sought to add healthcare and retail customers with its most recent deals.
Sage bought Tampa, Fla.-based Emdeon Practice Services, which makes software for doctors’ offices, for $565 million in September.
Late last year, Sage paid about $38 million to buy Britain’s Protx Group Ltd., which does online payment services.
The wheeling and dealing has paid off.
Last month, Sage reported North American sales of $496 million for the six months ended March 31, up 67% from a year earlier. The unit saw profits of about $93 million, up 31% from year earlier.
The North America part of the company based in Irvine is on track to do a billion dollars in sales this year, Verni said.
“We are holding our claim to the largest software company in Southern California,by a long shot,” he said.
Verni’s group drives the lion’s share of the business. Sage’s parent consists of a small cadre of directors and is based in Newcastle, near the English border with Scotland.
The company said last week it plans to rework its four North American divisions to better serve small and midsize businesses, Sage’s bread and butter.
The restructuring isn’t aimed at cutting costs, according to Verni. The company hopes to help independent sellers of its software work more efficiently with Sage’s customers.
Verni now has nine people directly reporting to him. Three are at Sage’s Irvine office. The rest are in Atlanta.
The companies that Sage has acquired largely kept their management and operations in place.
The strategy has helped Sage compete against software kingpins Oracle Corp., Intuit Inc. and Microsoft Corp., which have tried to move into Sage’s turf.
“People prefer to be serviced by local people,” Verni said.
With a saturating of Corporate America, small to midsize businesses are becoming an increasingly attractive target for the biggest software makers, according to Verni.
“All of a sudden, people who were dealing with the Fortune 500 realize that there are only 500 of them,” Verni said. “The small-business marketplace is a holy grail for everyone.”
Sage has more than 5 million customers worldwide and nearly 3 million in North America, according to the company.
Sage targets companies with five to 250 workers. The big guys consider a company with 3,000 workers small.
Verni doesn’t seem worried.
“No one has ever successfully brought a product down market,” he said. “You can’t dumb down a product.”
While Sage’s buying spree has slowed for now, it hasn’t ended.
“We are a highly acquisitive company, and we will continue buying,” Verni said.
About five acquisition prospects come across Verni’s desk every week, he said. Only a few are considered.
“We spend a long time analyzing markets,” he said. “We are not trying to be opportunistic,we are trying to pick the right company in the right segments.”
Sage aims to scoop up companies that either are No. 1 or No. 2 in their fields. The companies have to match Sage’s culture, Verni said.
“They don’t have to be performing incredibly well if we believe that we can help them grow,” he said. “Companies that we look at have to match our values and principles. That’s been a cornerstone to our success.”
