The M&A Category

Coupa’s Acquisition of Trade Extensions — Sometimes It’s Better to Be Lucky

Does Coupa understand what it just bought in the form of Trade Extensions, that little sourcing optimization company from a sleepy college town north of Stockholm?

Don’t bet on it. But don’t worry, they’ll figure it out soon enough.

Several of us ruminated on the possibilities over happy hour at Coupa Inspire, so I’d thought I’d share two of the highlights, the inside (and ever-so-slightly-inebriated) analyst view if you will.

Trade Extensions and Coupa Acquisition Analysis: Customer and Partner Recommendations [PRO]

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This Spend Matters PRO brief, part of a series analyzing Coupa’s acquisition of Trade Extensions (see also here and here), provides recommendations for Trade Extensions and Coupa customers and partners surrounding the acquisition. 

Spend Matters has spoken or met with many of Trade Extensions’ largest customers in recent years (most of which prefer to remain unnamed) and the most advanced organizations view it as the tool that affords the highest degrees of competitive advantage across the procurement technology spectrum relative to peers in as much as how it is used than what it has the potential to do. This is key. In fact, there are material levels of diversity among Trade Extensions users even in the same industry. Many customers expose some parts of Trade Extensions’ potential yet could get away with another optimization solution for at least some of their events, if not all. Yet best-in-class procurement organizations unleash its full potential to drive competitive sourcing and supply chain advantage.

Whether you view Trade Extensions and sourcing optimization at this level or more tactically, this Spend Matters PRO brief provides insight and recommendations into the combination of the two providers. It is divided into three sections: Trade Extensions customer recommendations, Coupa customer recommendations and partner recommendations.

Coupa to Acquire Trade Extensions: Solution and Market Analysis [PRO]

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This Spend Matters PRO brief provides a solution and market analysis of Coupa’s announced acquisition of Trade Extensions. Based on subscriber feedback, we’ve already been asked to go into details about what makes Trade Extensions’ optimization capability different from Jaggaer ASO (formerly CombineNet), BravoSolution, Keelvar, Determine/Iasta and Emptoris (IBM).

In addition, this brief offers a broader market-based analysis of the acquisition. As always, we invite Spend Matters PRO advisory customers to reach out to us for more insight behind our thinking and also to discuss if Trade Extensions is right for them (as well as alternatives). We will publish a separate customer and partner analysis PRO research brief later this week.

Given our knowledge and background in this market, we tried to think of an analogy to describe the combination of Coupa and Trade Extensions’ strategic sourcing capability. We think we’ve got a good one. However, we’ll share this analogy at the end of this research brief. First, to focus on what really matters, we’ll delve into some of the less superficial solution, customer and market analysis.

Coupa Enters an Agreement to Buy Trade Extensions: A Game Changing Move For Strategic Sourcing

After market close on Friday, Coupa announced it had entered into an agreement to purchase Trade Extensions, a specialist e-sourcing and strategic sourcing optimization vendor.

Coupa will pay $45 million for Trade Extensions when the transaction closes — $41 million will be paid in cash and $4 million in stock (which will be issued, it appears, to employees). Spend Matters estimates the valuation range for Trade Extensions (as a multiple of revenue) is in line with other typical SaaS companies, and that Coupa did not pay a premium for Trade Extensions, especially considering how unique the asset is in the market.

Google M&A: “Taking On” Kaggle, A Crowd Contest Data Science Platform

Tradeshift Baiwang

Google recently announced its acquisition of San Francisco-based Kaggle. Founded in 2010, Kaggle describes itself a platform for predictive modeling and analytics competitions and consulting. Organizations and individuals may submit projects as contests and set a monetary prize for solutions. Individuals or teams within Kaggle’s crowd of 600,000 data analytics experts propose solutions, and the originators of the projects select a winner and award the prize money. Kaggle also offers a talent solution that allows organizations to find and evaluate potential hires based on their actual projects and code. Small to large companies across a range of industries have used Kaggle — including State Farm, Facebook and Google, which used Kaggle extensively before the acquisition

Tradeshift and IBX: Partner, Customer and Competitive Analysis [PRO]

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The combination of Tradeshift and IBX changes the procure-to-pay (P2P) competitive landscape. Last week, we reported on the transaction and offered an initial analysis of what IBX will bring to Tradeshift. This Spend Matters PRO research brief provides an initial analysis for current and potential customers and partners of Tradeshift and IBX. It also provides insight and analysis on how the transaction will alter the competitive landscape.

Solution Analysis: What IBX Brings to Tradeshift and How the Combined Provider Stacks Up [PRO]

Tradeshift announced earlier this week it would acquire IBX Business Network from Capgemini, the previous owner of the procurement technology and supplier network provider. Spend Matters analysts Xavier Olivera and Jason Busch recently had the chance to speak to the Tradeshift team about the acquisition. They, along with other members of the Spend Matters research team, have spent time reviewing IBX’s source-to-pay solution in detail.

This Spend Matters PRO analysis provides an expert solution perspective on what IBX brings to Tradeshift, including IBX’s strengths in the e-procurement area. It also provides a brief discussion on how Tradeshift plans to integrate IBX into its solution portfolio, including planned (rapid) migration. Finally, it includes a March 2017 SWOT framework and March 2017 summary company analysis and graphical comparative overview of Tradeshift’s solution footprint and capability (inclusive of IBX) across the source-to-pay continuum in the sourcing, analytic, contract management, supplier management, e-procurement and invoice-to-pay functional areas.

Additional Spend Matters PRO analysis to follow in a subsequent research brief will include customer recommendations, partner recommendations and an analysis of the changing competitive landscape for source-to-pay suites, networks and platforms. Additional Spend Matters news coverage will share what we learned from our discussions with the Tradeshift team following the announcement.

Tradeshift to Acquire IBX Business Network from Capgemini

Tradeshift Baiwang

Tradeshift announced Wednesday it had acquired acquired IBX Business Network from Capgemini. Spend Matters believes the transaction is, by a significant margin, Tradeshift’s most important acquisition to date. And from the “seller” side of the deal, Capgemini suggests that the transaction represents, from a corporate development perspective, more than just the divestiture of a business unit. Spend Matters will be speaking with Tradeshift later today and will provide additional information and analysis on the transaction later this week. We are particularly keen to understand how Tradeshift plans to rationalize the proven e-procurement capability within IBX with what it is in the early stages of rolling out to customers in 2017.

IQNavigator + Beeline Update: Doug Leeby Discusses Merger Reactions, Vision for Combined Organization

Tradeshift Baiwang

In December 2016, the announced merger of IQNavigator and Beeline rocked the contingent workforce and services market. As the shape of the new firm takes form, Spend Matters caught up with Doug Leeby, CEO of IQNavigator + Beeline, to learn how customers have reacted, how partners are dealing the emergence of a “Big 2” and what he sees as the future of the VMS market. Stay tuned for Part 2 of this interview, in which Leeby provides an update on the combined product roadmap and competitive landscape.

Coupa and Spend360: Spend Analysis Background and Product Analysis [PRO]

Tradeshift Baiwang

Coupa’s acquisition of Spend360 brings an immediate set of capabilities to Coupa customers — and the basis of a broader, disruptive and embedded offering integrally linked to Coupa’s cloud solution. But what is spend analytics (and spend classification, specifically) and why should customers care? What types of reports should you be able to run? And more narrowly, what specific capabilities does Spend360 bring and how are these different than alternative approaches (e.g., AI/machine learning vs. rules-based classification).

There’s also the question of what Spend360 will ultimately enable Coupa to achieve by applying an AI-driven approach to the firm’s broader source-to-pay platform, including guiding users to better decisions based on insights their own data can provide, a broader topic Coupa’s CEO, Rob Bernshteyn, hinted at during a talk earlier this year. But we’ll leave this specific topic to a longer exploration after we’ve had the chance to delve into the “so what” for customers from the acquisition.

This Spend Matters PRO research brief provides a product-centric analysis that will help Coupa customers and prospects get beyond the headlines of the announcement and understand, on a comparative basis, what spend analytics really is, how spend classification works and how Spend360 stacks up to others.

WNS Acquires Denali: Acquisition Summary and Market Analysis [PRO]

Tradeshift Baiwang

Earlier today, WNS announced it had acquired Denali Sourcing Services, a procurement solutions provider. Denali was one of the pioneers in procurement managed services. But more recently, the firm has expanded its broader practice in such areas as spend analytics, market intelligence and training. Not all of these capabilities will transition over to WNS — some will remain with the original Denali group, which will be rebranded in the coming months.

Denali brings a number of capabilities to WNS, including a center of excellence (COE)-driven managed services capability for spend analytics, strategic sourcing, category management and supplier management. In short: It adds many “baited hooks” to chum the waters for the broader business process outsourcing (BPO) and outsourcing nets WNS is casting in the market.

But perhaps most important from a market perspective, the transaction will put pressure on other offshore BPO firms, including Genpact, Infosys, HCL and Tech Mahindra, looking to accelerate penetration in North America and Europe through the addition of onshore expertise and capability. For this reason — among others — Spend Matters believes this deal is likely a harbinger of more acquisition activity to come in 2017. In the near term, however, Spend Matters believes the acquisition will do little to blunt the leadership positions of Accenture and GEP for procurement BPO and managed services.

This Spend Matters PRO First Take Analysis provides an overview of the capabilities Denali brings to WNS, key takeaways, an overview of procurement managed services and insight into select additional acquisition candidates that could contribute to further consolidation in this market.

Coupa Acquires Spend360, Adds Best-in-Class Spend Classification Capability to its Suite

Coupa announced early Tuesday it had acquired Spend360 International Ltd., a best-in-class spend classification vendor. Coupa “has acquired substantially all of the assets of Spend360 International Ltd. to help companies digitize antiquated processes for data classification,” the company said in the acquisition announcement. Coupa noted the acquisition closed in December 2016 and that financial terms were not disclosed. Further, “Coupa expects the capabilities from Spend360 to be made available to select Coupa customers later this year. As part of the acquisition, the Spend360 team has joined Coupa to continue developing forward-thinking approaches for data classification and predictive insights.”