Accountancy software firm Quality Software Products Plc, Gateshead, Tyne & Wear, has signed a cheap joint venture with Global Software Inc, to reverse its profit decline by tapping the US market. Quality Software, which reported profits down 37% last half after high research and development costs, has taken a 5% stake in Global for no financial outlay. Raleigh, North Carolina-based accountancy software firm Global gets the right to market Quality Software’s Universal OLAS accountancy products in the US to its 1,000-strong customer base. The firms will operate a revenue-sharing scheme, where income from maintenance is split evenly between the two and income from licensing is split 45%-55% in Global’s favour. Quality Software, which turned over 6.6m last half and reports again next month, has the right to buy a further 5% of Global equity in the next three and a half years at current prices. Under the deal, its Universal OLAS product will be renamed Global/QSP Financials for the US market. The product will complement Global’s own products which, like Universal OLAS, are sold in modular form. Global’s software sells on the AS/400, IBM Corp mainframes and Unix systems. Global, which turned over $25m last fiscal year, signed the deal just days after its senior management bought the firm out from its parent company, Hathaway Corp, which is an electrical utility firm. Global’s senior management complained that Hathaway had been upstreaming profits, leaving it without the funds to develop client-server version of its software. From the Quality Software perspective, the deal provides it with a quick, cheap way to plug its turnover into a market which it places at 15 times its own size. The firm is now eyeing similar opportunities in Singapore and France, which are likely to occur in that order. For now it is selling directly into Europe, and has just won a contract with Commercial Union Europe in countries including Poland. A Quality Software source said that this could play a key part in its future European strategy. Until now, Quality Software has suffered criticism at the hands of the financial press following its flotation in March last year (CI No 2,135). Its heavy investment in developing Universal OLAS and the underlying Multiple Cross Platform Engineering technology drained $22m from its coffers, and caused it to adopt the policy of capitalising its research and development costs.
