Class to acquire documentation provider
SMSF software firm Class has announced the acquisition of a corporate compliance and documentation provider company for $4.2 million.
In an ASX statement, Class Limited said it will acquire all of the shares in Smartcorp, a company that provides documents to accounting and professional services firms and financial advice networks.
The transaction comprises an upfront cash payment of $2.73 million on completion, plus $1.47 million in Class shares escrowed for 18 months.
According to Class, Smartcorp currently services more than 1,500 businesses, primarily in the accounting space, including two of the big four accounting firms. Smartcorp enjoys long-term relationships with its clients, with the average relationship standing at more than a decade.
This latest announcement by Class follows its acquisition of NowInfinity and will help to grow Class’ footprint in the document and corporate compliance market, the software company said.
Class chief executive Andrew Russell said Smartcorp is one of the pioneers in this segment and, when combined with NowInfinity, will see Class with approximately 10 per cent market share by revenue.
“Combined with NowInfinity, we will continue to build our capabilities and compelling value proposition to ensure we help all of our customers manage their clients’ businesses more effectively through a comprehensive suite of services,” Mr Russell said.
“This acquisition will also offer Smartcorp clients a broader range of products and services.”
In the Class annual report, Mr Russell said Class also remains focused on organic growth through product innovation.
“Our market research indicated to us that there is a key pain point for trust administration, as there was for the SMSF sector,” he said.
“Like the SMSF space, to simplify and automate the trust administration process requires complex, rules-based coding to develop a software solution. Given that is a key Class capability, we are well placed to service our customers by developing a trust administration product.”
Mr Russell said the research conducted by Class indicates there is a marketplace of 540,000 trusts and a revenue pool of over $100 million.
“When combined with both the existing Class and NowInfinity product suites, we believe we can establish leadership positions in the documentation, SMSF and trust administration space. We will be in a position to launch Class Trust to all our customers in late 2020,” he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.