Pegasus Picks up CSM for #6.7m

Vendor records a 51 per cent increase in profit with growth coming mainly from Opera

Accountancy software developer Pegasus has bolstered its position in the financial market by purchasing Birmingham-based CSM for #6.7 million from Microvitec.

CSM, which sells software to accountancy professionals, will operate as a separate subsidiary and all of its 86 staff will be kept on. The deal ? which is for #4 million in cash, with the rest in loans ? is intended to strengthen Pegasus? connections with accountants.

According to Jyoti Banerjee, managing director of Tate Bramald Consultancy, only 57 per cent of accountants who recommend packages recommend Pegasus, compared with 86 per cent who recommend Sage.

Banerjee said: ?On the face of it, it is quite a lot to spend on a company which is not very profitable, but there are long-term marriage rewards to be gained.?

Pegasus is forming a profit improvement plan for CSM after CSM?s pre-tax profits fell from #329,000 in 1995 to #148,000 for the year ended 31 December 1996.

Jonathan Hubbard-Ford, CEO of Pegasus, said: ?CSM is ideal because it sells into a vertical market which complements our own and there is no product overlap. It will have Windows versions of the software by 1998.?

CSM operates direct sales teams in South Wales, Bristol and central London as well as having six dealers. Hubbard-Ford dismissed the possibility of channel conflict. ?Because of the exclusive nature of CSM?s [geographic] arrangements there will be no substantial conflict.?

Pegasus posted a 51 per cent jump in pre-tax profit to #1.3 million for the year ended 31 December 1996 on turnover up 23 per cent to #7.9 million. Most of the growth came from Opera, which contributed 65 per cent to sales. Hubbard-Ford refused to reveal sales figures for products in other markets, saying it was too early to comment. Legacy software sales fell by 30 per cent.