Capital SCF, the technology-focused independent corporate finance boutique, is pleased to announce the sale of its client Twinfield – Europe’s premier pure-play accounting software-as-a-service (SaaS) business – to Wolters Kluwer.
Dutch-based Twinfield is a leader in online, SaaS-based collaborative accounting solutions in Europe, serving professionals in the Netherlands, UK and Scandinavia. Through this acquisition, Wolters Kluwer expands and complements its existing offering of advanced software solutions for accountants and finance professionals in SMEs in all the western European markets it serves. Twinfield will become part of the European activities of Wolters Kluwer Tax & Accounting, the global market leader in tax, accounting and audit solutions and services.
James Clark, Director of Capital SCF said: “It has been a privilege to work with Twinfield on this transaction. André, Bert and the Twinfield team have built a compelling offering for SMEs and accounting firms. They are already the market leader in the Dutch market, and as part of Wolters Kluwer, they stand well positioned to compete in the broader European market. Capital SCF are strong advocates of cloud computing and software-as-a-service business models, and this transaction reaffirms the strategic importance of SaaS in the European technology landscape.”
About Twinfield
Twinfield is a European market leader in SaaS accounting. Over 80,000 financial accounts run on Twinfield across 22 countries. Twinfield ensures efficient, secure, real-time data exchange between clients and administration or accountancy firms. Because Twinfield works as a web application, users can access and exchange financial reports online anywhere and anytime via a secure internet connection. For more information about the company and its services go to: www.twinfield.co.uk
About Wolters Kluwer Tax & Accounting
Wolters Kluwer Tax & Accounting, a division of Wolters Kluwer, is the global leading provider of tax, accounting and audit information, software and services. Tax, accounting, and audit professionals who serve as trusted advisors to clients and businesses worldwide rely on authoritative content and integrated workflow solutions from global leader Wolters Kluwer Tax & Accounting. Wolters Kluwer had 2010 annual revenues of €3.6 billion, employs approximately 19,000 people worldwide, and maintains operations across Europe, North America, Asia Pacific, and Latin America, serving customers globally. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.
About Capital SCF
Capital SCF is a technology-focused independent corporate finance boutique headquartered in London. It provides high quality, independent advice to the senior management teams and boards of the European technology industry’s innovative incumbent and disruptor companies on strategic matters critical to their growth and success. Capital SCF’s directors combine a broad network of global relationships with deep sector knowledge and specialist M&A experience to deliver a superior, senior level of service for clients who value experience, judgment, insight and innovative thinking. In addition to mergers & acquisitions advice, Capital SCF leverages its team’s extensive corporate finance and capital markets experience to advise companies on capital structure and capital raising choices, selectively raising private capital for clients.
Google debate: challenges for technology SMEs
Thanks to Google for hosting a great debate: “Do we [in the UK] need more dedicated policies to help SMEs or are the challenges they face the same as any small businesses?”
The overwhelming answer, and clearly the debate title leads in this direction, was yes, for a number of reasons, which I’ll come on to.
First off, though, it’s worth mentioning that hosting an event with quality participants in a forum at which all are encouraged to contribute (in this case over dinner with some alcohol to get things going, and under Chatham House Rules) beats the 2-dimensional panel-audience conference environment which plenty of us are familiar with (which conferences, more often than not, you pay lots of money to attend). Hearing a panel of experts marketing their expertise being harangued by audience members whose aim is to be heard asking smart questions doesn’t work. And even the pre-post coffee chat often doesn’t go anywhere. (Un-conferences are far better in my view because they represent an intellectual rather than a paying community. Roll on Cloudcamp.)
The debate scenario, which admittedly is partially controlled by the Chairperson and invited guest speakers (who speak for no more than 5 minutes or so to warm up the debate), draws forth participants’ passionately held views about real problems they, their businesses or the ecosystem in which they operate may be facing. Let’s have more of this type of event please.
Some observations (follow-ons) from the debate are as follows:
The Tier 1 (General) visa application is now closed to applications from abroad (non EU citizens). This means that highly skilled people, previously entitled to apply for work or self-employment opportunities in the UK, can no longer do so. There is of course the option for companies to sponsor skilled employees under Tier 2 (sponsorship fee of £300 for small sponsors or £1000 for large sponsors) if they can prove compliance with the resident labour market test, but the time, effort and required infrastructure it takes to arrange this is a significant obstacle to resource-constrained SMEs. Entrepreneurial early-stage businesses are often flexible and can simply move out of the UK if the operating environment becomes unmanageable. Those businesses that cannot for one reason or another relocate will either have to find the skills they need in the UK or through the sponsorship process (which is not always possible: limitations as to numbers of sponsorship licenses available), outsource (which is not always commercially sensible) or fail. This issue has become another barrier to raising capital for entrepreneurs who are not always British citizens and who must provide comfort to investors that they (and their employees) will be able to stay in the UK.
It’s worth noting that some recent rules, posted on UKBA on 16 March 2011, have come out on entrepreneurs visas stating that though “the standard investment threshold for an entrepreneur to qualify for a Tier 1 visa will remain at £200,000, [...] the government will allow high-potential businesses to come to the UK with £50,000 in funding from a reputable organisation” (at this stage I am not clear what “high potential” means), but perhaps more interestingly a new visa is being created for prospective entrepreneurs who will be allowed to enter the UK, make arrangements and secure funding before transferring to a full Tier 1 (Entrepreneur) visa. An encouraging move; watch this space!
Online infrastructure is poor in London for SMEs: we note this as a SME ourselves. It’s easy for the enterprises which benefit from the scale possibilities of procuring high-end fat pipes to provide connectivity to many employees. For individuals, broadband works just fine. For SMEs (e.g. us) it can take several months to get proper connectivity. For us, moving into new offices, it took around 2 months for our BT EFM connection to become live and in terms of price-performance, the equation doesn’t stack up. Given that our business is run almost entirely using online services (see our blog on Startup Infrastructure), until our connection became stable, it made very little sense coming into the office. We think landlords ought to have some responsibility to provide connectivity as part of a standard services agreement.
Tax: The punitive UK tax environment makes it difficult to incentivise people to work in the UK. It’s not all bad. We approve of Entrepreneurs’ relief, for instance, though the legislation, it appears, could do with some tidying up around who qualifies for this and why.
Education: How to code should be taught in schools instead of (say) F***** or G********. We need to make coding cool and to encourage kids to build technical skills in a hobby environment. Maybe an app to introduce code-building is required; it could be made into a game.
The legislative environment (Digital Economy Act) has sought to protect outdated business models. Powerful lobbying from enterprises used to generating core revenues through selling content has contributed to this. However attitudes are changing with the advent of access-based revenue models which provide streamed content online. The access-based model has been adopted in China and India (where content has always been pirated) and works effectively. In countries where the technology environment is more developed, we need to see a paradigm shift from the sale of content towards providing access to content and generating revenues through this from advertising, subscriptions to online services and selling user data. The DE Act by criminalising file-sharing is pushing against the tide of the consumer market place and hampering collaborative innovation where it is needed i.e. investing in service-based models to enhance user experience. And, of course, all this ties back with the earlier point in relation to online infrastructure – for instance, as the access-based model continues to prevail (which will continue to happen in spite of the DE Act) and video and radio over IP increases in quality and bandwidth, the network will need significant beefing up to cope.
Some feedback from our SME clients
IP law creates a barrier to entry: It’s complex and expensive for SMEs to file patents and the protection they provide is only as useful as a company’s ability to pay its lawyers to protect them. Conversely patents are often used by the enterprise to quash new technologies either through acquisition (big companies buying patents to eliminate disruptive technologies) or through litigation (big companies putting SMEs out of business because they don’t have the cash to fight expensive legal battles).
Contract law versus copyright law: Copyright law is frequently overridden by what’s written in contracts between licensors’ and licensees’ of tech / content / services. I think the SME-related instance of this with which we are all most familiar would be the resale of software licenses, allowed by copyright (and the principal of first sale), but often forbidden by license agreements.
Procurement issues: It’s made difficult for SMEs to win large public or private tenders. Some of the gate-factors to winning such contracts are: “you have no insurance”, “we need 3 years accounts”, and “you might go bust”. I think we need to incentivise the enterprise to open up corporate policies to encourage SMEs to compete for large contracts. After all a disruptive SME has a much greater chance of delivering significantly cheaper services. We should be encouraging this!
Funding environment: British investors’ attitudes to equity-funding start-ups can be circumspect. We have had some great ideas come across our desk for which the UK market appears closed (so we go elsewhere). These are innovative disruptive business models that exhibit stellar growth prospects and with strong management teams. What’s not to love! The truth is pre-revenue has been a hard-sell of late, but we think this is changing.
Conclusion
The regulatory environment needs to be flexible to the global market-place and to encourage early adoption of new technologies. If we want to encourage entrepreneurship in the UK we need to protect SMEs against onslaught from the enterprise and to foster a culture of innovation through our legislative framework, our education system and in our working lives.
Further reading:
Graham Barker & Peter Bissell, A Better Mousetrap: the business of invention
Capital SCF, the technology-focused independent corporate finance boutique is delighted to announce the successful conclusion of the sale of its corporate client, Focus Solutions Group plc to Standard Life Plc for a gross consideration of £48 million.
The offer, which was unanimously recommended by the Board, valued the ordinary shares of the Focus Solutions at 140p each and represented a premium of 33.3% to the closing price of Focus Solutions shares on the last business day prior to the announcement of discussions.
Commenting on the closing of the transaction, James Clark, Director of Capital SCF said “It has been a pleasure working with the Board of Directors of Focus on this transaction and we are delighted at the result – both in terms of the value realised by shareholders, and also the strategic opportunities for Focus and its employees within the Standard Life fold.”
Richard Stevenson, CEO of Focus Solutions said: “Capital SCF’s deep sector knowledge, coupled with outstanding technical execution skills, was instrumental in our ability to deliver an excellent result for shareholders in the sale of Focus Solutions. We were delighted and impressed by the focus and diligence that they brought to the project and would have no hesitation in using them again or recommending them to others.”
The Cloud Security Paradox
- Enterprises can’t/won’t adopt cloud because of the security.
- Enterprises are moving their security to the cloud.
These two statements would seem to be opposing, but they’re both true – and there lies the paradox.
When the conversation is about ‘as a Service’ such as IaaS, PaaS and SaaS then in most cases the first statement applies. You don’t have to look very far to find security at the top of everybody’s list about why they’re not doing cloud. This is understandable. Moving stuff to the cloud involves transitional risks (bad stuff happening when you change things) and outsourcing risks (other people’s screwups getting you fired), and risk=~security right?
When the conversation is about Managed Security Service Providers (MSSPs) then the second statement applies. The whole point of MSSPs is that they can bring to bear on the thorny problem of security monitoring systems and expertise that no single organisation could do for themselves. There was a whole session at WEIS 2007, chaired by Bruce Schneier, looking at the role of MSSPs in the overall security ecosystem(/economy). MSSPs are used by some of the largest and most conservative firms on the planet (like Swiss Banks) – exactly the kind of organisations that say they’d have a hard time adopting ‘cloud’.
“Ah”, I hear you say, “MSSPs aren’t ‘cloud’ in the same way that IaaS, PaaS and SaaS are ‘cloud’” – at which point we need to define ‘cloud’. My definition of cloud (which I steal shamelessly from Simon Wardley[1]) is that it is the use of IT as a standardised commodity sold as a utility. This definition clearly works for MSSPs and for *aaS.
What I find odd is the expectation that an MSSP view of cloud (statement 2) can somehow influence a ‘security stops me from *aaS’ view of cloud (statement 1). Here are some of the headlines that set off this cognitive dissonance (coming from this week’s announcement that Dell will buy MSSP SecureWorks):
- Dell’s SecureWorks Acquisition Plans Fit into Cloud Strategy
- Dell Secures Its Cloud Strategy With SecureWorks Acquisition
- Dell expands cloud security portfolio with SecureWorks
and others are clearly feeling that dissonance, and think that the deal is actually all about pushing back against the threat of ‘cloud’:
- Dell-Secureworks, big deal for the cloud? I think not
- Dell picks up security firm SecureWorks to slow migration to the public cloud
I don’t think either are a true view. Dell buying an MSSP is unlikely to move many of their customers towards cloud (if they’re digging in against ‘security’ concerns) or away from cloud (if they are enlightened enough to realise that cloud services can meet their security needs).
The heart of the cloud paradox is that large scale service providers can do things with security that their smaller scale customers cannot – something that was covered brilliantly by David Molnar and Stuart Schechter in their paper presented at WEIS 2010. So *aaS style cloud brings the same sort of security benefits as an MSSP style cloud (and both bring their own risks). The paradox will be resolved when more people realise this.
[1] and Simon would likely say that his definition actual comes from Douglas Parkhill and others.
Financial Services – Head in the cloud
Slides from Slides from Intellect Financial Services Programme ‘The troubled Relationship of Cloud and Financial Services’ – London, UK
Startup Infrastructure
As escapees from enterprise environments my colleagues and I are often asked whether we miss the infrastructure that we used to have. Our usual answer is that we don’t miss it one bit – we have access to better infrastructure now than we ever had before. This post looks at what we use, and why it works so well for us. I should start by identifying two distinct types of infrastructure that I’ll label ‘operational’ and ‘administrative’:
Operational Infrastructure
This is the infrastructure that supplies the product or service of the company. If you’re selling widgets this could be a cloud based service (like eBay), a hosted ecommerce site or a server in the coat cupboard – draw your own conclusions about reliability and maintainability of that spectrum of offerings. If you’re selling a web based service you have similar choices – build on IaaS or PaaS in the cloud, find a hosting company you can trust, or build and maintain your own thing. Again there’s a bunch of compromises on resilience, cost, agility and control to be considered there (though it’s hard to see many situations these days where the cloud approach isn’t the default path). As an advisory firm Capital SCF doesn’t really have an operational infrastructure, we’re a relationship based business, and those relationships can be supported by an administrative infrastructure…
Administrative infrastructure
This is the stuff that lets you communicate with your colleagues, clients and partners, run the firm, keep track of the books etc. Capital SCF has taken a pure SaaS route, so we have no ‘office’ infrastructure beyond networking gear, desk phones, a couple of printers and places to plug in laptops. An emerging benefit to SaaS solutions is ‘integration’ in the cloud – many of our SaaS applications have provided API’s and integration to each other, allowing relevant data to be passed from Accounting to CRM and back again. This virtual integration has allowed us to extract much more value from the various components, and faster.
Collaboration
This is probably the piece that needs to be put in place first, as a domain and the email addresses that go with them are the 21st century letterhead. One of my first actions on joining Capital SCF was to move our email and collaboration platform to Google Apps (Premier Edition) [now renamed 'Business Edition']. The migration process from our previous SaaS email platform wasn’t too hard, but I’m glad I did it when we were small. I’ve had no regrets about choosing Google (though I have many wish list items of things they could make even better).
Email is the heart of the platform, and usually the thing that people sign into first. Having 25GB of space has proven to be a near enough approximation of ‘infinite inbox’ and avoids the need for any time to be spent on inbox maintenance (a constant drag I recall from MS Exchange and 40MB quotas). Tagging and search are also much more flexible ways of finding stuff when you need it than some hierarchy of folders.
Documents
Google docs/spreadsheet/presentations works brilliantly for sharing stuff with colleagues, but often lacks some of the features/speed of MS Office (particularly for complex financial models). We also come across parties from time to time that have issues with using Google (either blocked by overprotective corporate proxies, or considered ‘unsafe’), which has inhibited uptake for external collaboration. The outcome is a compromise of old world and new – MS Office for the complex, high fidelity stuff and Google Docs for more interactive material.
Sync
For the ‘old world’ of MS Office docs there’s often a need to synchronise between machines, and keep backups. For this we use SMEstorage, a service that sits in front of a variety of cloud storage services (such as Amazon’s S3) and that offers tools for Windows, Mac and the variety of smartphones that we use.
Sharing
To share documents etc. with clients (and in some cases amongst ourselves) we have been using BaseCamp, though there’s a growing sense that we’ve outgrown that tool (and some of my colleagues are presently kicking the tyres on Huddle). I’d love to find an online document management system that supports something more than hierarchical folders renamed as ‘workspaces’ (and that has great federated identity support), but I’m not holding my breath.
Chat
We aren’t huge users of IM, but Google Talk and Skype both see some use both internally and with clients.
CRM
Contact and pipeline management is the lifeblood of any sales organisation, making a good CRM platform vital. We chose Capsule as a good match for our needs (and pocket), and because we knew the team and found them responsive to our feature requests. Since joining the Google Apps marketplace Capsule has become better than ever, with single sign on and contact synchronisation taking much of the friction out of moving between CRM and email etc.
Accounts
Bookkeeping is a necessary evil, and one where you want a product/service that’s functional and otherwise keeps out of the way. We get just that from Xero, another startup where we’ve got to know the team, and like their approach to the market.
Expenses
Right now we use Xero for expenses, which is perhaps one of the few reasons for most of the team to ever log in. It works OK, but there could be some mileage in getting a more refined solution like WebExpenses.
Payroll
I’m one of those people that doesn’t care about pay slips provided that the right amount hits my account each month, so I barely notice that we use Able Internet.
Voice
Perhaps the one decision that I regret is deciding to go for a VOIP approach when we moved office earlier in the year. There are two problems here:
- Almost every VOIP service uses SIP, which is probably one of the most fragile protocols to have survived exposure to the wild (and there isn’t really anything decent that could be considered as competition).
- To have reliable VOIP you need a reliable network, a surprisingly expensive and time consuming commodity in central London. I have formed the view that cloud computing works despite the network rather than because of it.
Seduced by the quality of broadband in my rural home I thought we’d be able to get a better (ADSL2 based) service in the City, which turned out to be completely wrong. We got old ADSL1, and found out what contention ratios really meanL A fibre connection would be a bit rich for a 10 person office and was going to take 3 months to install[1], so the eventual compromise was EFM – low bandwidth AND expensive – the perfect telco product. I never properly costed out what an ISDN based PABX for voice would have been, but I’m fairly sure it would have worked out better than VOIP (though we wouldn’t have the flexibility of extensions at home and on the road). Provider wise we use VoiceHost (and in some cases Ribbit too).
Conclusion
Using SaaS has given us flexibility and functionality that we couldn’t have dreamed of with traditional infrastructure and packaged software. Costs also seem reasonable, though that hasn’t been the primary motivation for us. It’s all about time to value, which with (almost) instant provisioning, and the right integrations, can be super fast[2].
Notes
[1] Though it seems insane that landlords can’t have arrangements with telcos that would get fibre pre-installed and fanned out locally to tenants.
[2] I did a SaaS demo for a client last week where I set up Google Apps, Capsule and Xero for 10 users then showed how the various packages worked together. From a completely cold start this took 50 minutes.
Capital SCF Advises on Sale of Courtanet to BGL Group
Capital SCF, the technology-focused independent corporate finance boutique is pleased to announce that its client, Courtanet – owner of French price comparison sites assuremieux.com and creditmieux.com, has been acquired by the BGL Group.
“It has been a privilege to serve Courtanet and its founder Jehan de Castet in this transaction. Courtanet’s consumer price comparison services, www.assuremieux.com (“insure better”) and www.creditmieux.com (“better loans”) offer a compelling and valuable service for consumers, promising to revolutionise the French market. Jehan and his team have built an innovative and disruptive offering” said James Clark, Director at Capital SCF.
“Capital SCF delivered an outstanding counter-party for Courtanet in the form of the BGL Group. James and his team worked to an aggressive timetable – managing a complex cross-border transaction and bringing their deep domain expertise to bear, delivering a first class result for Courtanet. The firm’s relationship driven approach and singular client focus gave us support and confidence throughout the process” said Jehan de Castet, founder of Courtanet.
Billing bubbles
Two weeks ago I went along to an Amazon Web Services Tech Summit in London. It was a great event, and whilst the Amazon folk were mostly preaching to the choir, the case studies were well worth going along for (slides here).
This morning I got a follow up email asking me to take a survey. A few of the questions were irrelevant, as I signed up to AWS long before S3 and EC2 were launched (the initial ‘web services’ provided API access to the retail site, and gave me a handy way to try out various tools I was working on). At the end of the survey was one of those open ended ‘what could we do better’ questions, which got me thinking…
My answer was that Amazon should have ‘billing bubbles’ for its cloud services. I’m sure that I’m not alone in using services like EC2 and S3 for personal stuff and for work stuff, but like most folk it all gets charged to my personal credit card. At the end of the month I get a bill, which is usually ignorably small, so I often don’t bother expensing my ‘work’ AWS usage. Not all the time though, there have been some months when I’ve done some pretty heavy tyre kicking on EC2 for work projects, and the bill has been big enough for me to want that money back.
What I have in mind here is some way of tagging different assets as ‘work’ related (or whatever else) so that I can break them out on the bill at the end of the month. This would be pretty easy with S3, as I can simply use different buckets for different purposes (I already do this). Ec2 would be a little trickier; I imagine some sort of additional startup flag that could be set (and some means of setting a default).
I realise that this is just scratching at one edge of a larger problem that rests at the intersection of identity management and billing for cloud services, but it would be a good start. We need persona in the cloud just like everywhere else.
Slides from Cloud Computing Demystified Day – Copenhagen, Denmark
Capital SCF advises Logica on the disposal of its payroll processing business in the Netherlands.
NL – Rotterdam / Amstelveen, 16 July 2010 – Payroll and HR service provider ADP Nederland BV has acquired Logica Netherlands’ payroll activities. Capital SCF acted as sole Financial Adviser to Logica on the transaction. The acquisition will strengthen ADP’s market position in payroll processing in the Netherlands, and allow Logica to focus its resources on its core business. ADP is taking over the payroll activities of some 260 clients who use the P&I and PMS/PayFact platforms. Around eighty Logica employees in the field of payroll, account management and product development have transferred with the business to ADP.
Jan Piet Valk, CFO Logica Benelux said “Capital SCF has proven to be a reliable and most of all knowledgeable partner who brought extensive industry and transaction knowledge to the project. This added value to each and every stage of the project which in the end turned out to be critical for the successful completion of the transaction”
About Logica
Logica provides business and technological services. Logica has 39,000 employees worldwide. The company provides business services, system integration and outsourcing to clients all over the world. The company’s clients include Europe’s largest corporations. Logica helps its clients by successfully integrating people, business and technology. The focus is on long-term collaboration. Logica uses its knowledge of the sector to achieve innovative solutions for its clients. Logica is listed on the London Stock Exchange and on Euronext in Amsterdam (LSE: LOG; Euronext: LOG). More information can be found at www.logica.nl.
About ADP
1.4 million employees in the Netherlands receive their payslip from ADP Nederland BV every month. This number is rising year on year. ADP is growing steadily and welcoming more and more large organisations as clients. ADP Nederland has been developing systems and services for payroll & HR for 50 years. In the Netherlands ADP is one of the largest players in this sector. Worldwide ADP is the market leader with a turnover of nearly 9 billion US$. ADP, based in Rotterdam and Capelle aan den IJssel, has around 650 employees and achieved a turnover of 82 million euro in 2009 (financial year 2010). ADP has the (SAS70) type II attestation, which is vital for companies that want to comply with the Sarbanes-Oxley Act. ADP also has a Triple A rating. More information can be found at www.adp.nl / www.adp.com.
