This question prevented me from using Talenom’s services as well. It can be difficult, or at least very expensive, to switch away from a closed system. This can be viewed as Talenom’s moat as long as customers are willing to take that risk. Personally, I won’t take such an unnecessary risk, especially when competitors also have good systems. If everything goes well, this latest change could be healthy and improve growth prospects. If the software is as good as it’s made out to be, I’m sure the multiples on that side will compensate for the declining multiples of the accounting services.
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How will the change culminate when Talenom has to buy software licenses and usage from its other company? Will the charges to the customer increase? Perhaps it won’t have a major impact. My bigger concern is Talenom’s intangibles—is the balance sheet full of fluff?
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Well, at least those customer acquisition costs and part of the software development are on the balance sheet.
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Sweden’s Country Manager joining the Q3 webcast 
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New developments.
Kirjanpitaja.fi shows what the strategy change brought about: a freelancer platform/network that uses Talenom’s software.
I already started operating my investment company according to this model in June. Talenom’s sales manager gave me a tip when I requested a quote.
I got Tuomas from fk-accounting and things have been running smoothly. I can recommend them.
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This seems like an interesting and good opportunity for organic growth + broader software adoption without significant investment.
Next, we will likely see whether the software will be launched as a standalone service with its own website as a direct competitor to Procountor, or if sales/distribution will take place through Talenom’s own websites.
I like that the company’s hidden value is being highlighted and, above all, that they are seeking organic growth in Finland through this route as well. In the future, it would be better to concentrate acquisitions in Spain, where acquisition price levels have been clearly lower. Personally, I now expect acquisitions to accelerate again next year as Sweden starts producing results, Spain is in the black + interest expenses decrease.
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Having chewed on this strategy change, the best scenario is starting to form in my mind: Talenom splits itself up:
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The long-term goal is to be a pure software house.
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The Finnish accounting firms are merged with, for example, Aallon Group.
a) Alongside that, a software deal for Aallon Group that makes sense for both, to further scale up the software business.
b) Aallon is already listed, so after the merger of the accounting firms, a stock exchange listing isn’t even needed. The merger could be implemented as a share swap, meaning no taxes are realized for Talenom’s shareholders. -
The same pattern in Sweden and Spain after the software rollouts. Divest the accounting firms and sell the software to anyone who wants it.
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The end result after the divestment of the accounting firms would be a software company seeking international expansion with a light balance sheet, with a localized product already in three countries. From there, depending on the company’s ambition, it could either transition into a company operating in three countries or look for potential new countries one by one. Hopefully with better focus than so far.
This pattern could likely be the best way out of the current somewhat messy and erratic strategy while creating value for shareholders at the same time.
In my opinion, the evidence of clarity in the strategy work is quite weak. Time will tell where Talenom ultimately ends up. For now, I’m still holding my shares (I’m not making any sudden moves). However, with this track record, further purchases are inevitably on ice, even though the price level is potentially interesting.
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Or maybe sell the offices to Aallon as well? Surely it’s not worth divesting them at this point?
It depends on whether Aallon Group wants to internationalize. However, the key here is to only carry out the sale once the software is in use (unless the purchasing party gives a strong commitment to it before the deal, which I doubt). This would provide a foundation of scale for the software business outside of Finland as well, which is invaluable.
I slightly disagree.. Internationalization is easier with your own offices than with software alone. For example, at least a few years ago, Fortnox wasn’t making a profit abroad, even though it was doing great in Sweden..
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What idea would Talenom have in merging offices with Aallon? Talenom’s Finnish figures are in completely different spheres when compared to Aallon. Talenom has a clear acquisition strategy, bringing efficiency to its targets, whereas Aallon does nothing. If one considers sensible mergers, it would be Administer’s accounting firms + Aallon. They are roughly similar operators. There is no speculation about this anywhere, even though it would be the only logical pair to speculate on.
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Divestments in this situation would be the stupidest thing in the world after the investments have been made and the fruits have yet to be picked. Of course, divestments would release significant hidden value, as Talenom has consolidated small offices where acquisition multiples are significantly lower. Doesn’t Inderes’ sum-of-the-parts calculation fully account for this? It is a different thing to buy an office with €1m in revenue versus buying +€20m in revenue at once. There is evidence of this when looking at Aallon’s and Talenom’s historical purchase prices and their multiples. Right now, it is specifically worth stepping on the gas again with acquisitions in Spain next year, as acquisition multiples are very low and improving cash flow makes it possible again.
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Are you first selling at the bottom because of the front-loaded nature of internationalization costs + software costs, and then doing the same thing again in new countries? What is the logic here?
Isn’t the strategy, in the end, completely in line with the will of the largest owners? You only need to look at the shareholder statistics from the past year; the top 100 have increased their percentage ownership by over 5 percentage points, while retail investors are throwing in the towel at the bottom. Do you believe the price will be the same when Sweden + Spain are rolling, if you are considering additional purchases?
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Software, Finnish operations, and internationalization.
Finnish operations are the only ones proven to work. Throw them away and put all focus on software, for which there is no evidence of success?
A very bold strategic move, one might say.
Or from another perspective: strategic zig-zagging continues without a goal. Just when we finally understood how to prune the sprawl of previous years, we’re messing around with something new again.
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Analyst’s pre-comments on Talenom’s Q3 results. 
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I’m not sure if this belongs here or in some “personal experiences” channel, but I’m posting it here because I’d personally like to hear if anyone has similar experiences with any company, as these are essential matters for investment decisions, at least for me.
Talenom is used at my workplace. The quality has indeed been poor. We had a good, trusted accountant, but they burnt out and left. since then, the contact persons have changed a couple of times within a few months, and the standard has been weak—we’ve had to do their work for them. There have also been technical issues. We will likely switch providers during the next tender (the tender is being held primarily because of Talenom’s poor quality).
Talenom should invest in its personnel. If you ask management, of course, everything is fine, but my own experiences show something else. They should invest in staff, try to improve employee retention, and ensure that every customer has their own trusted contact person within Talenom. I don’t know if Talenom has had more turnover in general or if customers have left, or if these failures just happened to hit me.
Experiences like these remind me why accounting firms are such a fragmented market. It’s a people-driven business; if an accountant leaves the firm, they can easily take the clients with them if they’ve built a good relationship of trust. This relationship is hard to replace, even with good software.
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Can you elaborate a bit more on what poor quality has meant in practice?
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Separating the software business into its own company now seems like a quickly made decision. Perhaps economic facts have now forced them to use all available means.
Read the Talenom Story book which can be found here: https://www.talenom.fi/wp-content/uploads/talenom_tarina_2022.pdf
The story is from 2022 and the following text is a quote from page 88:
” Harri Tahkola admits that actors in the accounting industry have been interested in buying the software system created by Talenom, but they haven’t wanted to sell it. According to Harri Tahkola, the reason is simple. They don’t want competitors to reach the same starting line, so that the company’s growth doesn’t slow down. ”We are not dependent on others. There has always been plenty of interest in our own software,” says Mikko Siuruainen, a member of Talenom’s board (2016–). However, many have followed Talenom’s path; proprietary software has been developed for companies like Accountor and Visma, among others. These have since separated their software business into its own division, whereas Talenom has wanted to stay under one umbrella. ”We want to keep the software for ourselves. Talenom’s entire service offering stems from the idea that the entrepreneur does not want to do paperwork. If the entrepreneur handles their paperwork in a second, that’s good. But if it takes five, it’s already too much. Now that we have built the software and the service side together, we burden the customer as little as possible. Our customer pushes only one button instead of many. In competitors’ systems, the customer has to go through many steps to approve an invoice. I think that the entrepreneur doesn’t want to do that,” Harri Tahkola says. Juha Jutila strongly believes that if the software were sold, things would become too complicated. Adopting one’s own software has been a rare, even unique, move by Talenom. Talenom’s solution has changed the entire accounting industry. At the latest, it has now been realized that operating with the traditional model is not necessarily always the best option. ”Small firms don’t have the money to build their own software, and for large ones, this separation easily happens. Our way of operating is very exceptional. We primarily help the entrepreneur, we don’t just cash in on this quickly. This is the backbone of everything,” Jutila emphasizes”.
It should be mentioned that Harri and Mikko are members of Talenom’s board and significant individual shareholders in the company. Juha Jutila is also still working at Talenom.
It can be noted that the world’s great ideas of the internet era have been particular success stories when they were realized and launched/productized as quickly and efficiently as possible.
Talenom’s accounting software was probably clearly ahead of other software in the field, but the situation doesn’t seem to be the same anymore. In other words, competitors have also done good work.
Everyone can now reflect on the management’s latest message against the story above.
Regarding Talenom (and other companies), it’s worth following LinkedIn, for example. The latest observation was that Talenom is recruiting several sales managers in Finland. This sounds like they are returning to the strategy from years ago, i.e., seeking organic growth again by investing in sales.
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Talenom Plc registered a bundle of domains under the name Platnom in December 2023. This suggests that the plans to separate the software business had already been initiated at that time.
Registered domains: platnom.fi, platnom.net, platnom.se, platnom.es, platnom.it, platnom.de, platnom.dk, and platnom.fr.
A bolder observer might draw even further conclusions and guess, based on the country codes, which markets the software will be sold in after Finland, Sweden, and Spain.
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Similar experience. The software is nothing special. Talenom doesn’t seem to care much about their customers’ affairs. Plenty of messes and unfinished work were left as a memory of the high price. I asked an accounting firm if they would be interested in adding Talenom’s software to their selection. The answer was “not even for free.” Now they’re just building new “hype” around the software business as the foundation starts to fall out from under the old stories. I wish luck to those along for the ride.
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Talenom is, however, a fairly large company in its field: many customers, employees, interns, and partners have accumulated over the years.
Personally, I have heard good things about Talenom through my own contacts. I don’t have direct personal contact with the company itself (though I have seen Harri before and exchanged a few words). Furthermore, as an observer from Oulu with a home-field advantage, little birds have been singing quite positive things in my ears over the years.
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Poor quality has meant, for example, that an information request sent for a meeting was never answered. Sometimes the system freezes, making it impossible to upload required attachments. Questions may have been passed from one person to another. The previous accountant was always a couple of steps ahead of us and knew how to do things without being asked. Now we have to do things the accountant used to do because the new ones don’t know how. This is, of course, completely human—not knowing everything right away—but that is exactly why it would be important to organize a transition phase where an experienced person and a new person work on the same client simultaneously, especially for slightly larger ones. That way, if one leaves, there is always at least one who understands the client’s needs.
We had an absolutely brilliant contact person, during whose time there would have been nothing to complain about. However, they burned out. From this, I concluded that staffing levels are not at the required level; instead, good employees have too much work and the onboarding of new ones suffers. Turnover also means that there are constantly only new people, and they don’t have time to develop into experienced professionals.
Talenom certainly has scale, so it could well be that I have just had bad luck and, on a large scale, things are fine. However, this reminded me why the accounting firm market is so fragmented. If someone is a great accountant at Talenom (or another larger firm) and feels that it is not a good workplace for them, they can easily start their own accounting firm and take their clients with them. Many people prefer to have a trusted accountant; they are loyal to the individual, not the firm.
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