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Fathom co-founder David Watson talks about the acquisition by Access Group
David Watson_Fathom

Access-Fathom deal: An insider’s view

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Days after joining the Access Group, Fathom co-founder David Watson explains how the acquisition will open up new opportunities for the reporting and forecasting app.

31st Aug 2022
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Towards the end of last year, the directors of reporting and analysis app developer Fathom were contacted by representatives of the Access Group.

The UK-based mid-market software house has been on an Asia-Pacific (APAC) acquisition spree over the past three years, so Fathom was not the only company to experience this kind of approach.“Like a lot of people in this market, we occasionally get those sorts of enquiry,” co-founder David Watson told AccountingWEB.

“I had some knowledge of The Access Group when they knocked on the door and it’s been a process of discovery. As we heard them out, our conviction grew that this was the right step to take Fathom to the next level.”

Without specifying the numbers involved, Watson said that he and his fellow co-founders Dan Walls and Geoff Cook felt like they “realised fair equity value” from the deal. But another attraction was that Access planned to keep things running as they have been for the past 13 years.

“They’re buying what they see as a good business and they don’t want us to break stride – ‘Keep doing what you’re doing, retain the same team and the same focus on customers and geography,’” said Watson. 

“Apart from a subtle change of our new tagline – Fathom, An Access Group company – the goal will be to do that at an even greater scale.”

After bootstrapping Fathom from a small handful of employees to an 80-person segment leader, the Fathom directors are looking forward to being part of something bigger. 

“We don't have an HR department, recruiters or in-house counsel. Now we’ll be able to call on these corporate facilities and focus on the core, which means shipping a good product and backing that up with good customer service. That’s part of the reason we did it, which should also benefit customers.” Watson continued.

For the founders, this means being able to focus on things they like doing best. “Dan, Geoff and I are product people. Staying on in product-focused roles is definitely part of our future.”

Steady as she goes

Fathom’s roadmap and market priorities won’t be changing immediately, but Watson and his colleagues have an interesting challenge on their hands to adapt to new demands for technical integrations and joint marketing opportunities with the parent group.

“The thing that surprised me was that there’s obviously a broad umbrella at Access. A number of solutions they have could be complementary integrations for us, including Access Workspace and Access Financials. There’s a gap in their portfolio that we can fill.” he said. 

“They told us to keep the momentum of what we’re doing and prioritise the right integrations. We will release those in the next 12 months or so, but not in the coming days or months.”

Aside from giving Fathom the opportunity to sell its reporting and analysis app into mid-size organisations using Access Financials, the acquisition opens up another route to market in the APAC region, where Access owns the Reckon software group and remnants of Sage’s operations in that region. 

“I don’t think Access is in a position as a competitor to Xero or QBO, but from having no footprint three years ago, we feel like we’re joining them in the formative years of something in APAC. I’m pretty confident they’ll complete other acquisitions this year in this geography,” said Watson.

The link with Reckon and related accounting and practice products like APS and Handisoft means Access now has around 8,000 Australian accountancy firms as customers. “A lot of those firms will be Fathom customers already. We think we can go to them together as a group and package our offering in some way to really serve that customer base,” said Watson.

Attrition, what attrition?

With so many potential avenues for continued growth, Watson has little time for the market attrition analysis AccountingWEB put forward to explain the rash of recent forecasting and planning app acquisitions. “I can’t speak for others. It was a long slog for us, but we always took the mindset that building something in apps is a marathon, not a sprint. We’ve always bootstrapped and never took funding. Maybe growth could have been faster if we went down a different route, but the trajectory has been slow, steady compound growth that has accelerated over the years,” he said.

The Covid shutdown knocked things sideways for a couple of months in 2020, he continued. “But then something happened. It picked up and accelerated. We had the best 12 months of our lives, and the next year was the second best. Our numbers have never been better across all the fundamental metrics of acquisition, retention and expansion across all territories over the past two years.

“Our hypothesis is that when things get tight, the demand for understanding your numbers becomes more important. Communicating with stakeholders and advisers giving clients more frequent reports, planning different scenarios for the future – that became more important too."

Compared to its other regions, Fathom’s presence is lowest in the UK, which means that this country may reap some of the biggest benefits for the new combination. “We started in Australia and New Zealand and opened an office at the same time in the US,” said Watson. 

“For many years we didn’t have a team in the UK and weren’t able to provide the same level of support in the UK. We’re playing catch-up for not having proper representation in that market and are hoping that Access and the Fathom team there will help us make up for lost ground and really solidify the UK as a major market for us.”

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