M&A activity is in full swing this time of the year. We’re aware of more deals in the works – not to mention those that were announced this week – than we can remember in recent memory. Just this week, SciQuest announced it had acquired CombineNet, and Tungsten announced it was acquiring OB10 and combining it with an additional company (a bank) and new capabilities in the analytics area. Moreover, acquired and consolidated vendors (e.g., Ariba within SAP) are beginning to make some material changes to their business and how they go to market – even within existing customers – that are likely to materially change how users work with the provider.
In this environment, how can customers best protect themselves? We’ve got a few suggestions to start, many of which we outline in significant detail in the Spend Matters PRO research brief: VMS and Services Procurement M&A: Customer Tips and Tactics. Temporary PRO access to this research brief has been underwritten by Beeline for the next month, making it available to all Spend Matters readers. Many of the recommendations in the brief can be applied to other areas of procurement technology and solutions as well. Here are some practices to consider.
- Pay particular attention to change of control clauses.
- Invest the time to get educated on alternative approaches and providers.
- Hedge your bets by using separate providers for different areas. For example, for a VMS, this could include separating out contingent labor/staffing spend that goes through a VMS and SOW/project-based spending by considering alternative solutions for each. For purchase-to-pay tools and supplier networks, this could include separating out network connectivity decisions from underlying e-procurement and e-invoicing tools.
- Consider alternative fee models that put the buyer in control (i.e., fully understanding the procurement risks associated with supplier fee-based models) in the event of change of control.
- Understand whether or not you are a strategic customer for the provider.
This list is just a start for understanding how to protect yourself in the event that a solution provider that you’re working with is acquired. In the above-linked research brief, we go into significantly more detail on these topics, albeit with a services procurement bent.
If you’re currently using procurement solutions from third-party technology or services providers or are in the evaluation phase, we encourage you to attend our first “pop-up” webinar taking place on the subject on Thursday, Sept 19th:
Attendance will be limited to the first 100 qualified practitioners who register to ensure we can get to all audience questions. In the webinar, we’ll cover recent procurement sector acquisitions (OB10, SciQuest/CombineNet); IPO market activity and what it means for providers (and customers); potential vendor management system (VMS) and services procurement acquisition candidates (including dark horses); and potential VMS buyers and steps customers should take to ensure their interests are looked after in the case their service providers are acquired.
If you can’t make the webinar, stay tuned on Spend Matters Plus/PRO for additional coverage of the M&A landscape, including the recent customer, competitor, and partner implications of the recently announced transactions. And do check back when new deals are announced in the market. As always, we promise the most comprehensive and expedient coverage for our readers and subscribers.