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My tower systems sale scenarios

POS SOFTWARE

I am now getting a lot of enquiries about Tower Systems' Sale and what's happening with it. Gossip does not like a vacuum.

The short answer is I don't know, but after being involved in many business sales on both sides, I can make an educated guess.

Here are the facts: Tower Systems announced to its clients and suppliers that it had been sold to Vela Software. It is one big subsidiary of a vast multinational company. 

Vela Software

 

When I heard this, I was shocked. Rumours had been circulating in the industry that Tower Systems was for sale; I'd been involved in one such negotiation but walked away. 

But it's one of those things where Grandfather is very sick; we know he's very ill, and we're waiting to hear that he's died. But when he dies, it's still a shock. Same issue here - I knew Tower Systems was for sale, but when I heard in October it had happened, I was shocked. Then, we all would be further surprised by the silence.

Vela's Likely Acquisition Process Timeline

Initial market research (1 to 3 months)

Preliminary financial assessment First, informal contacts probably use a business agent appointed by Tower Systems.

Preliminary Engagement (2-4 weeks)

Exchange of NDAs Initial information sharing CIM review First meetings

Initial Evaluation (4-8 weeks)

Analysis of business fit Preliminary valuation Market position assessment Initial offer/expression of interest.

Formal Agreement Stage (4-8 weeks)

Negotiation of terms The signing of a definitive agreement Subject to due diligence conditions Confidentiality maintained

Due Diligence (6-12 weeks)

Comprehensive review process Multiple workstreams: • Financial • Legal • Operational • Technical

I suspect the problem might be here, which is holding up the deal.

Decision Point (2-4 weeks)

Review due diligence findings Final negotiations, if needed Go/no-go decision Possible price adjustments.

Completion and Integration (4-8 weeks)

Final documentation Deal Closing Public announcement Integration begins

So, a typical timeline would be six to nine months.

The Deafening Silence

Now, people are commenting on what's happening and why we're hearing nothing from either Tower Systems or Vela Software. This silence is very unusual. Generally, the buyer and seller make a joint announcement once a sale occurs. There's usually a ceremony, pictures are taken, and a joint public announcement is made.

From what I can see online, Vela's standard acquisition practices include a clear pattern of formal announcements, CEO statements, and continued communication. It's very much in the buyer's interest to notify stakeholders in the company they're buying immediately after the sale about what they intend to do. Customers need reassurance. Suppliers want to know what's going to happen. Staff need to know what to say, and the buyer wants to know what the staff will do after the takeover.

The Tower Systems situation now lacks these hallmarks—no formal announcement, no Vela acknowledgment, and abrupt communication cessation. This isn't typical for Vela Software, which usually maintains transparent communication and formal processes.

This silence is deafening.

Possible Scenarios

Given these unusual circumstances, I have four potential scenarios, some of which are not mutually exclusive.:

1. The Sale is Going Ahead

I propose that Tower Systems' announcement was unauthorised and early in this scenario. Although it was signed, Vela has yet to go through with the sale and is following the path of due diligence. They're still checking. The holiday season has delayed them moving forward immediately.

If so, I suspect we're looking at late January or early February 2025 for the formal announcement.

2. Someone Else Has Made a Competitive Offer

Although unauthorised, Tower System's announcement was an intelligent move to get someone else to act. Maybe there's someone Tower Systems was talking to who wants the company. Vela Software was probably only one of many approaches to buy Tower Systems. Tower Systems is effectively saying that if you wish to have us, you need to act now, or you will lose us. If so, I wonder if we'll hear much until March 2025 as they return to the negotiation. It would also explain Vela Software's silence, as they might be out of the race now.

We're looking, I think, at March 2025 to hear more.

3. Vela Software Rejection

Here, Vela Software said they would buy Tower Systems, but during due diligence, they found something they didn't like and walked away. For this to be true, the sale must have significant issues.

I've heard of this happening many times. I had a client who was going to sell his shop. The stocktakers were counting the day before the transfer. The new owner looked at the value of the existing stock being added up and told the stock-takers to stop as it was too much. He then announced it was far too much stock for what he had been told, and it looked old. The sale was cancelled.

If this is the case, I expect we won't hear anything from anyone.

4. Vela Software Wants a Price Renegotiation

The deal was made. Tower Systems announced it as a done deal. But then, while doing their due diligence, Vela Software found things they didn't like. They're willing to go ahead but want a better price or a change in conditions.

If so, we're looking at a fresh valuation process and negotiations. In this scenario, I wouldn't be surprised if we heard nothing more until March.

Market

Having made the announcement, I feel Tower Systems should say something now. In the meantime, I suggest that anyone doing business with Tower Systems immediately ask for a written statement from Tower Systems stating that the terms of the existing agreement will be honoured for the payment. New guy means new terms and conditions.

While the silence surrounding the Tower Systems sale is unusual, it's not unprecedented in business acquisitions. As we move into the new year, we should see more clarity on the situation. Therefore, don't be surprised if we hear something only in March 2025. After that, I think it's only fair for us to ask questions.

Comments

I am a user of their product and find this news about the sale quite concerning. This is the first time I heard of it. I've checked their official website thoroughly but couldn't find any announcement or information about this proposed sale. Has anyone else received any official communication about this? The lack of transparency is quite worrying, especially for those of us who rely on their product daily.

As a guess, you probably are not listed in one of their newsletter lists. 

There were a few different notifications sent out to various people; the one you should have got was the one that went out in the early November newsletter, which included this note. 

 

 

 

Bernard Zimmermann this obsession of yours does not serve you well. ..............

Bernard Zimmermann here. It's fascinating that you're so invested in discussing my obsessions again - perhaps we should channel that energy into a productive conversation about how we can better serve our industry. I've always found that success leaves little time for gossip

Bernard Zimmermann two things. 1. You edited my comment. It did not contain rudeness, blaphemy or untruth. 2. Goddip is what you appear obsessed with. As for me, business is good. Our shop is having a good Christmas.

Andy, that is what the dots are for, in written communication, the ellipsis (three dots) serves several important functions, one of which is that we indicate omitted text or missing words

The reason is that here posting requirements are clearly defined. When making allegations about individuals or organizations, posters must:

https://www.possolutions.com.au/Terms%20and%20Conditions

  1. Identify themselves
  2. Provide substantiation for their claims

You did neither, more details here.

 

PS I can confirm that following Tower Systems' sale announcement, I contacted the departing owner, Mark Fletcher, to extend my best wishes. During this conversation, he verified the sale of Tower Systems to Vela Software.

PSS, I am happy your shop is doing well over the holiday season, care to share which one it is? 

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The Changing Face of Australian POS Software

POS SOFTWARE

A significant shift has occurred in our POS market—one of our long-standing competitors, Tower System, was just sold. I'll wait for the formal announcements before commenting in detail.

This latest acquisition continues the trend in Australia of our local Point-of-Sale (POS) software industry being taken over by large American companies.

Forty Years of Industry Change

This latest market movement brings to mind a pivotal industry meeting from twenty years ago. Six of us were there, representing different POS companies, and we were all passionate about the future of the news-agency industry. It's pretty sobering to realise that I am the only one still active in the industry from that group. All the others have passed on; I am the last one left. It's particularly deep as I have known this guy for almost 45 years. 

The Complexity of Market Consolidation

What's particularly interesting about this recent acquisition is the overlap the acquiring company already has in the market segments of the company it just brought. I also made an offer, but I did not offer enough.

Market Overlap Analysis

This acquisition is notable for this crucial reason: the acquiring company already has a strong presence in many of the target company's market segments, e.g., e-commerce, convenience stores, retail, non-profits, grocery, liquor, and pet supplies, so the acquiring company will face critical strategic decisions based on my experience with similar acquisitions. They'll need to evaluate which market segments to prioritise and which ones to streamline.

Final Thoughts

While I am the last one standing from that meeting 20 years ago, what I do know then as now is that the fundamentals of good service and understanding your market always stay in style.

Comments

As a current Tower Systems user, I have some questions regarding the recent takeover of Tower Systems, I wonder whether it will be going up again my existing software support package?

Dear Pauline,

These messages are inappropriate for this forum as we have no connection to Tower Systems.

What happens with their ownership changes is something their new bosses' future plans are probably working through now. 

I suspect we are dealing with a premature announcement, and the current silence is due to Tower System being instructed to maintain confidentiality. I am sure they have signed an NDA, and I feel this has been broken. If so they will be told that.

Here are my projected time table:

Scenario Analysis

1. Deal Proceeds as Originally Announced

  • Standard due diligence process by Vela (estimated 6-12 weeks)
  • The holiday season will likely cause delays
  • Expected completion: Late January/Early February 2025

2. Deal Termination

  • A likely outcome: No formal announcement

3. Deal Renegotiation

  • Extended timeline required for:
    • Negotiating new terms
    • Potential fresh due diligence
  • Projected announcement: March/April 2025

This uncertainty means we may face a waiting period of up to six months before gaining clarity on the situation.

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