Neller actively looking for human resource and payroll acquisitions, MD says

6 June, 2008

The following is an excerpt from Australia Merger & Acquisition Intelligence Alert: mergermarket.com as distributed via email on Friday 6 July 2008.

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Neller, a privately-held Australian human resource and payroll software and solutions provider, is actively looking for acquisitions, said managing director David Page.

Page said the company would like to do a deal sooner rather than later, ideally within the next 12 months.

Neller was acquired in a management buyout in April 2007, at which time Australian private equity provider and M&A adviser ANZ Capital became a majority shareholder. Page said ANZ Capital is supportive of the company's strategic plan to look for acquisitions in three main areas.

Page said the company could be involved in the consolidation of one of its competitors, which include tier 2 Australian human resource and payroll solutions providers such as privately-held Australian human resource companies Empower, Frontier Solutions and Rockfast, as well Sage Micropay (owned by the Sage Group Australia, part of the global UK-headquartered accounting and business management software company Sage Group), ADP Australia/New Zealand (owned by listed US business process management and employer solutions provider ADP) and private New Zealand people management software company Payglobal. "If we thought any were open to an approach we would be happy to talk," he said. "But any acquisition would have to be a strategic fit, so we may or may not ultimately be interested".

Page said Neller is also keen on acquisitions that could broaden its service offering outside of software or add value to its existing capability. He explained that the company's core business is payroll, but it is keen to move into the broader human resources and outsourcing space. He said it is also open to acquiring for other complementary technologies like a more advanced rostering technology. Page said there are lots of smaller companies that could be potential targets.

Acquisitions, he said, are also aimed at broadening Neller's geographic coverage from Australia and New Zealand to include Asia as those economies become more advanced in their human resources and payroll systems. He said Neller is keen on offering an Australasian service to multi-national clients. While this can be done through partnerships, he said, acquiring stakes of or businesses in that space could be valuable. He said he has actively been looking for targets in the past nine months and there are several companies of interest. He declined to name markets, saying they are all companies with "activity in a large number of Asian countries".

Page said Neller would be willing to acquire a company that is larger than it as long as it did not result in a loss of control. He declined to divulge revenue, but said it is between AUD 10m (USD 9.5m) and AUD 30m (USD 28.6m). Page said Neller has a close relationship with ANZ Capital, which can provide support in terms of both capital and expertise. He said Neller also works closely with its accountants, KPMG.

By Louise Weihart in Sydney

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