Accounting-Software Firm Sage Buys ISO Verus for $325 Million

In another move by a financial-accounting software company into payment processing, Sage Group PLC is acquiring Verus Financial Management Inc., a privately held independent sales organization, for $325 million in cash. Based in the U.K., Sage markets software used by small businesses to manage finances. Nashville, Tenn.-based Verus provides card processing and electronic check conversion to 101,000 mostly small retailers, including gas stations, restaurants, and automobile dealerships. With transactions totaling almost $10 billion annually, Verus was one of the few remaining large privately held ISOs. Sage, whose products include the Peachtree accounting program, competes with Intuit Inc., which dominates the market for financial accounting among small businesses with its QuickBooks software. Sage said in a statement today it intends to integrate Verus's payment-processing service in its software in response to demand from entrepreneurs and other small-business proprietors for a system that can manage financial accounting and payment processing without double entry. Sage's products claim 2.4 million U.S. users who are now potential clients for Verus's payment services. Following a similar strategy, Intuit in September 2003 acquired Innovative Merchant Solutions, a Calabasas, Calif.-based ISO, for $116 million. According to figures released today, Verus has enjoyed strong internal growth in recent months following a flurry of acquisitions in 2002 and 2003, expanding from $6 billion annual processing volume at year-end 2004. The company was founded in April 2002. Sellers of Verus were shareholders in Financial Technology Ventures, a San Francisco-based private equity firm. Financial Technology Partners LLC and FTP Securities LLC, related companies, advised Verus in the sale, which is expected to close within 30 days, pending regulatory approvals. FT Partners also advised Lynk Systems, another ISO, in its 2004 sale to Royal Bank of Scotland for $525 million, as well as By Touch Solutions last year in its acquisition of processor CardSystems Solutions Inc.