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K3 continues buy and build strategy in ERP mid-market

Microscope contributor

AIM-listed K3 Business Technology Group continues its roll up of mid-market ERP and CRM resellers with the acquisition of Clarita Solutions from FD Systems for £1.1m.

This is the second time that Manchester-based K3 has raided FD's business portfolio, taking over its Sage 200 business unit for a total of £1.25m in December and the fourth purchase it has made.

Clarita - like its new parent - punts Microsoft Dynamics NAV ERP software, with a niche built up in the retail space and already distributes K3's Pebblestone fashion distribution software.

Andy Makeham, chief executive at Microsoft mid-market ERP reseller K3, said that with business similarities in common, "we can readily integrate into [it] our existing operations".

The deal adds £1m of recurring revenues and an incremental 70 customers that K3 can sell further software and services, including hosting.

Last year, Clarita made an 8% operating margin on sales of £3.1m while for the six months to 31 December, K3 achieved an operating profit of £4.66m, up 7%, as turnover grew 5% to £24.76m.

It has been a busy time for K3 since November when it took over Hampshire-based hosting firm Panacea Ltd for £1.7m, a month before it splashed out on FD's Sage business.

The third acquisition came at the start of this month in the form of Microsoft Dynamics AX ERP specialist Sense Enterprise Solutions for £1.2m.

The "age of the enterprise application is passing" as interest grows in the more flexible cloud economy, said Clive Longbottom, services director at Quocirca.

"The new approach will be for businesses to aggregate function from the cloud to better support their existing processes - not change their processes to fit a piece of software. 

The role for the channel therefore becomes one of the aggregator - identifying the functions that are required and knitting them together in a manner that fills the needs of the customer."


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