The management buy-in team at Headland Group Plc was always going to have a tough time pursuing its ambitions to build a major software and computer services company out of Compsoft Plc, a company that had a bombed out share price and Compsoft Manor in Godalming as its only significant asset. Couple that with the fact that the effort is being performed at a time when cash is king and no-one wants to take on board large lines of penny stock shares, and the fact that every issue of shares for a new acquisition threatened to dilute the core shareholders almost out of the picture and the team could be said to be attempting the impossible. Against that background, Headland, whose shares currently stand at 36 pence, down from 1989 high of 49 pence, is actually doing quite well, albeit not without plenty of hiccups along the way. On the acquisition front, you win some, you lose some, and so while Multisoft Plc has performed well since its acquisition in October 1989, albeit that it brought some surplus baggage with it in the shape of a previous failed attempt at a merger and an abortive foray into Germany, Mega Ltd, acquired in October 1988, has been a big let-down, having failed to bring out its DEC version of the Miracle accountancy software written for Data General minis. That failure cost Mega its autonomy and it has been absorbed into Headland, which is working to rescue the development project – albeit at the cost of further below-plan trading for the current period. The good news, if such it be, on the Mega front is that the earn-out of up to UKP8m on top of the UKP4m paid up-front has failed to be earned, so Headland is home free on that score. Headland’s initial acquisition after the management buy-in and change of name, Wootton Jefferys Plc, has turned out to be only a partial success, and those talks on letting the Wootton Jeffreys Consultants arm go in a management buyout (CI No 1,373) have reached a successful conclusion. The business doesn’t fit with Headland’s strategy of becoming a leading UK player in accountancy software, but the Wootton Jeffreys Systems custom software arm is being retained. The price to be paid for the buyout is UKP523,745 cash, UKP315,615 upfront and the rest in monthly installments up to March 1991. The Brookwood premises, in which Wootton Jeffreys Plc has a freehold interest, are being retained by Headland. The proceeds will be used to reduce debt. For the future, Headland is making tentative steps into the US, a move that will cause fainthearted shareholders to blench.
