Impact on Xero of KKR bid for MYOB

AFR reported comments on the KKR bid for MYOB and impact on XRO.

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QVG Capital principal and portfolio manager Chris Prunty said the deal could be good for Xero, saying KKR saw value in MYOB for its strong cash flow.

"In the past the private equity playbook has been to raise prices and reduce product development spend," he said.

Outspoken fund manager and Xero backer, Bronte Capital's John Hempton, congratulated MYOB on "getting a good price", but said whether or not it would be good for the business in the long run remained to be seen.

"How it works out depends a lot on what they do. Most private equity deals are run for cash. They maintain or increase pricing, reduce development spend, move costs to India. If they do this it could work out well for the buyer and for Xero (and Intuit)," he said.

"Alternatively they could run for growth. I think they would fail because Xero is just better. But it would still not be great for Xero."

https://www.copyright link/technology/kkr-looks-to-help-myob-catch-up-to-xero-20181008-h16dck