Breaking News – Xchanging Acquires Spikes Cavell

Earlier today, Xchanging announced it was acquiring Spikes Cavell, the UK-based spend analysis provider with operations in the US and UK, serving both the public and private sector. The transaction values Spikes Cavell at over 4X trailing revenue and includes both cash and earn-out provisions.

According to the announcement, “Xchanging has agreed to acquire 100% of the spend analytics company Spikes Cavell Analytic … for a total potential cash consideration of up to $11.5m … The Acquisition is subject to certain customary closing conditions and is expected to complete by the end of March 2015.”

We’ve known Spikes Cavell for years, and they are a familiar name in particular in the UK public sector. One unusual aspect for a company of their size is the strength and stability of the senior management team – an impressive bunch who have worked together for many years. It is far from being a one-man company, even if Luke Spikes is very much the public face and personality of the business.

My guess is that most people would have estimated their revenues to be higher than the announcement implies they actually are, a sign that there is a strong “brand” there in the spend analytics world. Xchanging Procurement Services is of course one of the three largest outsourcing procurement firms around, but under the leadership of Chirag Shah is now making a determined move into software and managed services as well. The acquisition of MarketMaker4 eighteen months ago was a big success; Shah will be hoping to do the same with this one.

Spikes has around 35 staff, mainly based in Newbury, Berkshire, and services over 60 customers. As we previously reported, the firm has “worked out a way to service small clients well, providing impressive support material and on-line help so the physical support team (and its cost) is kept to a minimum. That means their price points start at a level which is a feasible option to small councils for instance, who don’t have much money to spend.”

But they also work at the other end of the scale; one of their very largest clients is the Scottish Government, for whom they analyze some £10 billion of annual spend across most parts of the public sector in that country.

We’ll explore in more detail the thinking around the deal and the possible implications next week, and there will be more later today on our US website too – check that out if you are interested.

Disclosure: Spikes Cavell and Xchanging are past clients of Spend Matters Europe Ltd.

Spend Matters Group, LLC, (of which my partner Jason Busch is a shareholder) provided consulting services to Spikes Cavell.


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