Edinburgh-based accounting software supplier FreeAgent has been bought for £53m by RBS, marking the bank’s first acquisition since its disastrous £49bn takeover of Dutch giant ABN Amro in the lead-up to the financial crisis
FreeAgent is a provider of cloud-based software-as-a-service accounting software solutions and mobile applications designed specifically for UK micro-businesses (defined as sole traders and companies with fewer than 10 employees) and their accountants. It has 100 full-time employees and sales of £8m.
RBS and FreeAgent have an existing commercial partnership, which, following a successful pilot, has seen expanding customer numbers. RBS offers FreeAgent's accounting software to its business banking customers and, following a rollout in the fourth quarter of 2017, more than 10,000 RBS customers are already signed up.
The bank says it intends to operate FreeAgent as an operationally independent member of the RBS Group, retaining FreeAgent's existing management team and maintaining its current Edinburgh location.
In a statement, the bank said: ‘RBS values the entrepreneurial culture of FreeAgent and believes that by providing access to the additional financial resources and infrastructure of RBS and facilitating access to potential new FreeAgent customers, there is an opportunity to accelerate the growth ambitions of FreeAgent, including within FreeAgent's existing direct and accountancy practice sales channels.’
Andy Roberts, chairman of FreeAgent, said: ‘The combination of FreeAgent and RBS makes sense for our talented people, for our company's growth prospects, and for the shareholders who have backed our journey so far. For those shareholders, today's offer represents a 5x multiple on our current revenues as well as a very substantial premium to our IPO price.
‘For the FreeAgent team, it opens up a huge opportunity for them: a chance to target the entire RBS SME client base with a product designed with their needs in mind. It is for these reasons that I and my board colleagues fully recommend the offer to shareholders.’
Writing in a blog on the company website Ed Molyneux, founder and CEO of FreeAgent said he and the rest of the executive team would continue to lead the company following the takeover, which has to go through formal approval before being completed.
‘This offer provides us with a unique opportunity to progress towards our vision that we set out in 2007 when the company was founded, and to invest heavily in FreeAgent, making it even better for our customers and partners. As part of a larger organisation we want to accelerate our growth ambitions in the micro-business and accountancy practice space, as well as significantly improve our core product,’ he wrote.
Report by Pat Sweet
