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What hasnít been said about MYOB buying Greentree
Posted on 3-Aug-2016 19:17 by Bill Bennett | Tags Filed under: Articles

Australian accounting software company MYOB bought Greentree for NZ$25.5 million now and will pay another $3 million if the owners meet unspecified targets.

Itís the latest move by what was until recently the regional leader in small business accounting software.

Over the last five years Xero has hammered MYOB†by offering a clean,††online, subscription-based alternative to desktop PC accounting software.

The pair squabble over numbers, but whatever the details, Xero has pulled a lot of market share from MYOB in New Zealand and Australia. And that fact alone informs every major decision MYOB makes.

Xero looms

Xero thinks big. Its goals stretch far beyond Australasia, the New Zealand based software company wants to handle the worldís small business bookkeeping and expand into providing wider fintech services.

In contrast MYOB remains focused†on Australia and New Zealand. Which goes some way to explain why it bought Greentree. If Xero is expanding outwards, MYOB is pushing up.

Greentree is a New Zealand-based business software company with a range of ERP (enterprise resource planning) products. It sells to around 850 organisations in New Zealand, Australia, the UK and US. It’s a quiet achiever, an export earner and something of a catch for MYOB.

Sweet spot for suites

Most of Greentreeís customers are larger than the companies that buy small business accounting software from the likes of MYOB and Xero.

They include firms like Ryman Healthcare, Mediaworks, Easiyo and Johnstonís coachlines. These are big names in New Zealand, but they are small in regional terms and tiny on a global scale. Greentree also counts schools among its customers.

Even so, the important point is that Greentreeís customers are organisations that need more than basic small business accounting. There are dozens of ERP modules in the firmís portfolio.

To a degree this squares with MYOBís other recent New Zealand acquisitions. In the last three years it has purchased BankLink, PayGlobal, Ace Payroll and IMS Payroll.

While this portfolio extends MYOBís reach into adjacent markets, the overall thrust is to push the company upmarket to serve more lucrative customers. ERP buyers spend a lot more than the dozens of dollars a month MYOB can charge for small business accounting software. Greentree licenses typically run to many thousands of dollars a year.

The cathedral and the bazaar

While MYOB is moving upscale, it is also vertically integrating. This is in contrast to the focus at Xero which has developed a vibrant ecosystem of partners that create point apps extending the brandís reach.

Writing in the NBR, Chris Keall quotes Ben Kepes who says MYOB will treat Greentree as a cash cow and bleed the company dry while moving its customers to MYOB products.

That sounds plausible. Itís a tried and tested strategy, many software companies have treated acquisitions the same way in the past.

Keall and Kepes also mull over the potential, imminent parting of the ways between MYOB and Bain Capital, the US private equity firm owning a majority stake in the business. In the greater scheme of things,†Greentree†is too small to be a material consideration in what happens next to the company. On the other hand, a timely acquisition shows the management isn’t asleep at the wheel ó something potential investors will want to see.

However, it also looks as if MYOB is feeling the heat from intense competition with Xero at the mass market end of the accounting software game. Moving into markets where customers are less inclined to count pennies speaks volumes about how MYOB views the future of small business accounting software.

What hasn’t been said about MYOB buying Greentree was first posted at

Filed under: Business Apps, Cloud Tagged: MYOB, small business accounting software, Xero

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