Sage Software Business Minds Survey Advises That SMBs Have Opportunities to Increase Business Valuations in Buyers Market

SCOTTSDALE, AZ -- (MARKET WIRE) -- October 17, 2006 -- Small and mid-sized businesses (SMBs) have significant opportunities to use CRM to obtain the best value from their business at an exit, succession or transition according to a new Sage Software Business Minds survey conducted by Vanson Bourne, an independent research company, on behalf of Sage Software. With a large number of SMBs looking to exit in the next few years, Sage warns these businesses need to find ways to compete more effectively and to differentiate themselves in a buyer's market.

Having customer data in a single CRM system is a tangible asset according to 70 percent of respondents with such exit strategies. However, only 35 percent use a CRM solution to help advise on their business strategy. This problem is further accentuated by poor planning with 65 percent of SMBs not having or unsure about their exit strategy. The findings by Sage were part of a global study exploring the relationship between the use of customer data, business strategies and performance.

Sage believes that many SMBs are not putting customer data to its best use as a tangible asset when seeking an exit. Having a central record of all customer relationships is a tangible business and financial asset for companies seeking an exit, whether that is a trade sale, succession, venture capitalist or public offering. According to Sage, having a CRM system provides a strong negotiation tool in which to maximize the value from the business because it provides any future owner or manager insights into the customer base and opportunities to hit the ground running, but also minimizes disruption to customer service. Supporting this position was the finding that 48 percent of respondents said that CRM would reduce the risk of losing customers at an exit and would improve the continuity of the business during such a transition.

Dave Batt, senior vice president and general manager of Global CRM for Sage Software, said: "We believe SMBs have an opportunity to make the goodwill locked away in customer data a very tangible and accessible business asset. In particular, when considering any form of exit strategy customer data can provide insight into customer buying trends for buyers or investors. The ability to present customer data in a meaningful way not only helps negotiations, but provides future leaders of the business with visibility into the customer base. This ensures relationships are maintained and risks are reduced when exiting the business. In active markets like today, where businesses are consolidating to gain competitive strength, we urge SMBs to develop their exit strategy and ensure that CRM plays a central role in the planning process and as a negotiation tool."

A CRM system is often seen as a tool to improve marketing, customer service, segmentation and productivity/efficiency, but is often forgotten at the point of exit. Many SMBs have failed to plan their exit, which puts customer service and future opportunities at risk. Only 35 percent of respondents to the Sage survey have taken steps to plan their ultimate exit even though 64 percent want to exit within one to ten years. Sage is concerned that 47 percent of respondents said that they would like to find more time for business planning and that a further 21 percent were too busy to plan the business.

Planning the exit at the outset of the business will help organizations shape and mold the business to that objective. Furthermore, using customer data will further help to make decisions that will help fulfill the exit strategy, according to Sage. Today, the market is one of consolidation and heavy M&A activity, while IPOs have slowed down. According to the survey, selling to a third party (34%) was seen as the most popular exit strategy globally with Australia (53%), USA (42%) and UK (39%) making it their clear choice. In France, it was split evenly (29% each) for family succession, business partner takeover and dissolving the business, while businesses in Germany (34%) planned for a family succession. In today's consolidation and M&A market, it is not surprising that trade sales are high on the exit agenda but they should not be automatic choices.

Customer relationship management industry analyst, Denis Pombriant of Beagle Research Group, said: "It is no secret that customer data is crucial for SMBs that want to maximize their value at exit. A CRM system is a natural customer information repository and the best way of accessing and managing customer data. CRM is an important asset when seeking an exit."

"The Sage survey yielded further interesting results," continued Pombriant. "For example, the majority of SMBs recognize that CRM is a tangible business asset but few are using it as one. Customers are an important asset that many SMBs overlook when valuing a company. If organizations believe that customers are at the heart of business -- which most undoubtedly will -- then they should consider how to best manage customer data right through the business lifecycle to an exit."

The Sage research surveyed 800 SMBs of all revenue sizes and industries across six countries, ranging from zero to 1000 employees, by Web and telephone during July 2006. The UK and USA provided 200 respondents each, while Australia, France, Germany and Ireland each had 100 respondents.

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Sage Software supports the needs, challenges, and dreams of more than 2.6 million small and mid-sized business customers in North America through easy-to-use, scalable and customizable software and services. Our products support accounting, operations, customer relationship management, human resources, time tracking, merchant services and the specialized needs of the construction, distribution, healthcare, manufacturing, nonprofit and real estate industries. Sage Software is a subsidiary of The Sage Group plc, a leading international supplier of accounting and business management software solutions and related products and services for small and midsized businesses. Formed in 1981, Sage was floated on the London Stock Exchange in 1989 and the Group now has 5.0 million customers and employs over 10,500 people worldwide. For more information, please visit the Web site at www.sagesoftware.com/moreinfo or call (866) 308-2378.

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Contact Information: Contact: Ryan Zuk Sage Software 480-368-3818 ryan.zuk@sage.com Shana Keith Porter Novelli 404-995-4557 shana.keith@porternovelli.com