Jaggaer to Acquire BravoSolution: Initial Thoughts and Considerations

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Jaggaer announced Wednesday it will acquire suite provider BravoSolution for an undisclosed sum. The combination would make Jaggaer the “largest independent, vertical spend management solution provider in the world,” the company said in a press release, with more than 1,850 customers connected to 3.7 million suppliers in 70 countries.

News of the planned deal comes nearly six months after Jaggaer’s acquisition of Pool4Tool, a provider of sourcing and purchasing solutions for direct materials procurement. (PRO subscribers can review our strategy analysis and customer recommendations on the earlier transaction.) This latest move would make Jaggaer, which rebranded from SciQuest in February, the No. 2 player to SAP Ariba in the procurement technology market by revenue.

“The combination of BravoSolution and Jaggaer creates a powerhouse in the global spend management space and represents the execution of our strategy to build a super suite of fully integrated spend management solutions,” said Robert Bonavito, chief executive of Jaggaer. “This acquisition enables the largest companies in the world to do business with a single partner and cover all of their spend management needs.”

Jim Wetekamp, chief executive of BravoSolution, calls Jaggaer a company on an aggressive growth path. “The combination will allow increased innovation and provide a foundation for procurement digitalization that will set the trends and benchmarks for the entire industry,” he says.

Spend Matters will be publishing in-depth analyses on the acquisition in the days ahead (see our first brief with recommendations for BravoSolution customers here) but in the meantime, here are initial thoughts from analysts Jason Busch and Pierre Mitchell:

  • The industry-based go-to-market approach (at scale) will be key to differentiating the combined provider in the market — but the current industry-based offerings (outside of some of the Pool4Tool assets and legacy SciQuest capabilities) are generally not yet as tailored for individual vertical sectors such as retail supply chain applications are.
  • In the manufacturing area, the combined firm will be the undisputed functional/solution leader on an overall suite basis, at least outside of procure-to-pay (P2P).
  • These are two big suites, and each suite was formed from acquisitions that are not 100% integrated yet (individually) to a common code base and data model.
  • The comparative size to SAP Ariba, as well as the Europe/U.S. synergy of the two firms, will be interesting to watch. Overall, however, this is still a smaller holding company relative to providers like Infor, even if it is a relative giant for the procurement technology sector.
  • For U.S. buyers, what will change? Is it just that they can “safely” buy Bravo? If so, how? Common customer support infrastructure? The synergy is unclear in the short to medium terms. Even within the public sector, which is traditionally a strong area for BravoSolution in the U.K. and Europe, it doesn't change the consideration.
  • While financial terms of the transaction were not disclosed, Spend Matters estimates that the deal was done closer to a 2.5X–4X multiple range (trailing revenues) than the 10X or higher valuation range ascribed to Coupa and other faster growth, cloud-based firms in private funding rounds.
  • Both providers delivered strong performances in the Spend Matters Q4 2017 SolutionMap for the areas that they participated in. The most recent SolutionMap results suggest that both providers are facing the prospect of being flanked (functionally) by Coupa in the sourcing area, based on its acquisition of Trade Extensions, similar to how SciQuest acquired its way into advanced sourcing capabilities through its acquisition of CombineNet.

Stay tuned for further coverage and analysis on Spend Matters PRO.

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