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Exmouth-based tax and practice software house Digita has been acquired by Thomson International for an undisclosed sum. John Stokdyk reports.
The drama surrounding the deal was heightened by Wolters Kluwer's £35.5m move to acquire MYOB's UK accountants division on Monday. As the sole independent top four supplier, Digita had previously rebuffed numerous takeover approaches.
"We had our first offer eight years ago and since then we've had approaches from organisations that included many of our competitors," Digita co-founder and managing director Jeremy Rihll told AccountingWEB. "We always took those approaches seriously, but they were never the right organisations to take Digita to the next level.
Rihll founded Digita with Roger Thomas (current role) 21 years ago and views the company as "our baby". But with Thomas approaching retirement age and looking to step back from the front line, the partners had been thinking increasingly about succession.
"We were approached pretty recently by an intermediary working for Thomson, who had been stimulated by all the private equity activity in the market," Rihll explained.
"Thomson has a very successful tax software business in the US and they took us over there to meet the founders of a company that was acquired eight years ago. They had retained the same base, the same people and automony and put a very convincing case.
"This is not just about money," Rihll said. After 21 years as a private company in a market controlled by the likes of Sage and IRIS, he added, "We couldn't take it to the next level on our own."
Thomas will become a part-time consultant, but Rihll will remain as managing director of Digita, which will retain its base in Exmouth and be aligned with Thomson's UK professional services business, Sweet & Maxwell. As a sign of the international information group's ambitions in this sector, it also recently acquired the Australian tax software developer PowerTax. Last year, Thomson also acquired the Reuters news agency.
"The Thomson team has lifted our horizons beyond our dreams. We can look to grow the business through acquisitions and using Thomson and Reuters assets around the world," said Rihll.
"From the Thomson point of view, they have gone to number one in the legal and accounting market in the US and they want to achieve that over here. They were looking for a vehicle in the UK, and Digita is it. Our goal is to be number one in the UK and to triple our market share in the next five years."
In a letter to Digita customers, Rihll and Thomas explained, "We feel truly honoured that Thomson, which has served the UK profession for many years, can see the potential in Digita and want to support us as we take our business to the next level. Now, we don't just have the best technology, we also have the scale and resources to drive it... We believe this union, between Digita and Thomson, will reward you not only with long term security and stability, but also with the technical innovation that brought you to Digita in the first place."
Helen Owers, president & chief operating officer of Thomson International Legal & Regulatory commented, "Digita has a fantastic suite of software products with tremendous appeal and brand loyalty across the accountancy profession. Digita's position has been built on investment in customer service and product development, and that is a culture that we are committed to in the future... We will continue to invest in Digita’s product development."
Thomson is a $10bn information conglomerate, but something of a sleeping giant in the UK accountancy market. The Thomson Tax name and its tax reference products disappeared when the division, then part of Gee publishing, was closed down in June 2000. Gee was subsequently merged with Sweet & Maxwell, according to a 2002 AccountingWEB posting by former Thomson Tax editor Rebecca Cave. It looks like we might be hearing more about the Thomson Tax brand in the future.
