M&As in Procurement Technology Work

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A recent post by Michael Lamoureux, M&A: Confusion or Clarity, got me thinking about the role mergers and acquisitions are playing in shaping the procurement technology landscape today. As I see it, the recent deal activity can help a number of organizations realize the often elusive acquisition synergy goal of having 1+1 = 3.

But Michael, as may be clear from the title of his post, argues that M&A in procurement technology brings more sizzle than steak, especially from both a solution and customer perspective and a translation to financial returns.

Here’s the broader question: How can 2 good minds (I hope!) examine the same topic and arrive at 2 very different opinions?

I take a more optimistic lens. For reasons both planned and unplanned, M&A within the procurement sector has brought more positives than negatives, at least with many bigger name firms.

In a recent Spend Matters PRO post on the topic, Making the Case for M&A With Procurement Technology Firms: A Case-Based Analysis, I use 3 case studies – Xchanging/MarketMaker4, SAP/Ariba and Sciquest – to explore different benefits that transactions can bring for acquiring parties outside the usual plug and chug accretion-dilution model synergies.

Having spent much of my career focused on strategy and corporate development work and analysis within the procurement and supply chain solution areas, I believe this area of the technology market likely outperforms others from a deal synergy perspective for a variety of reasons:

  • The overall complexity of the solution landscape and functional areas compared with other business application and technology solution areas
  • The relative youth of this area compared with others and the need for bringing together the right sets of talent at the right time
  • A constant march toward suite approaches and integrated solutions in recent years
  • Capital markets, as well as private equity money, that have favored acquisitions and combinations
  • Overall CAGRs for different solution areas that support the cost and risk of doing deals

As for the individual reasons and benefits for doing deals, I encourage you to read the case examples in the above-linked analysis.

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