Certify, Chrome River to Merge Their T&E, Invoice Management Prowess

Certify and Chrome River Technologies, two travel & expense providers who also offer invoice management software, will merge in a deal that’s valued at over $1 billion, a statement Tuesday said. It also realigns the market and makes the investor in this transaction an even bigger player in this sector, two Spend Matters' analysts said.

Portland, Maine-based Certify and L.A.-based Chrome River initially will operate separately but will collaborate on investing in technology like artificial intelligence, machine learning, analytics and reporting, the announcement said.

The companies have more than 11,000 combined customers across more than 100 countries, the announcement said. The merger also adds Chrome River to Certify’s other brands, like Nexonia, Tallie, Abacus and Captio, the announcement said.

Merger Analysis

Spend Matters’ founder and analyst Jason Busch offers some perspective on how the deal reshapes the market.

“The combination of Chrome River and Certify continues to build on the T&E roll-up model that has driven Certify in recent years. Certify’s past acquisitions include ExpenseWatch, Tallie, Nexonia, Abacus and Captio,” Busch said. “To this mix, Chrome River adds another T&E solution (and revenue) as well as extended capabilities in the accounts payable automation area.

“While still smaller than the SAP Concur deal, this transaction furthers the potential for a duopoly situation with two larger providers and a fragmented set of smaller vendors compromising a minority share of the market.”

Investment Analysis

In the Certify-Chrome River deal, K1 Investment Management will hold a majority stake in the combined organization, and existing shareholders, including the companies’ founders and Bain Capital Ventures, will keep a minority interest, the announcement said.

Pierre Mitchell, Spend Matters’ chief research officer, takes a look at the investor and a broader view of the Certify transaction.

“This deal is more than just two major players in the T&E space joining forces on their own,” Mitchell said. “K1 Investment Management, a previous investor in CLM provider Apttus, clearly sees the $8 billion payout that SAP made in Concur and is hoping to replicate that by establishing a dominant best-of-breed player that’s not owned by an ERP firm (SAP) or source-to-pay player (Coupa).

“An enterprise player like Expensify might win on user experience for expense capture, reporting and reimbursement, but the travel booking side isn’t to be ignored. As part of this rollup, Certify got a $125 million infusion of cash from K1 in 2017 to integrate Nexonia, ExpenseWatch and Tallie, but then the provider also acquired corporate travel booking provider NuTravel (and also a few other firms like Abacus and Captio),” Mitchell said.

“Chrome River for its part is a solid player in the space and seems to actually have more employees than Certify. On the Certify side, it has some compelling aspects of its solution such as its mobile functionality like receipt scanning/parsing capability, but its overall desktop is tired — even though functionally rich."

Mitchell said it will be interesting to see how K1 integrates these firms — similar to Concur's application platform/marketplace approach — rather than making them a "Frankensuite" player of T&E apps.

“But, at this rate, K1 will be setting itself up as one of the two leading T&E player’s in the market, and K1 will then be looking to get a handsome return on its investment.”

 

 

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