Selectica Acquires b-pack; Initial Thoughts

Yesterday, we saw 2015’s first major corporate activity in our procurement software world, as Selectica announced it was acquiring b-pack, a privately owned firm specialising in purchase-to-pay (eProcurement + e-invoicing) technology with broader source-to-pay suite modules as well. Selectica acquired Iasta, a sourcing specialist, last year, which has since been fully integrated into Selectica from a commercial and management perspective although the technology is still independent.

b-pack was originally a French company and although it has expanded into the US to some extent, and recently opened a small London office, is still primarily successful in France and continental Europe. (We talked to their team at the eWorld event recently but to my shame had not got round to writing up the article as we’d planned).

Selectica is largely US based, quoted on the NASDAQ stock market, whereas Iasta had business well dispersed around Europe and the US. So Selectica are making much of the new customer base in Europe.

“I am excited about the opportunity to join with industry leader b-pack, extending our product portfolio; enhancing our global footprint -- particularly in mainland Europe where b-pack has a strong market presence; and expanding the solid team of professionals we have working to serve our clients," said Blaine Mathieu, President and CEO of Selectica.”

Here are the highlights of the financials:

Selectica is acquiring b-pack “for approximately $12.5 million in cash and stock.” Selectica intends to pay 90% of the purchase price in Selectica stock and 10% in cash, which seems smart. “b-pack's revenue for calendar 2014 is approximately $4 to $5 million, based upon its preliminary, unaudited financials”. So the purchase price is around 2.5 - 3 times revenue, which seems about what we might have expected.

“It has historically grown in the low double-digits overall, with its SaaS business having grown much faster. A majority of its revenue is currently generated from customers located in mainland Europe, while its U.S. market presence has been building in the last 3 years since opening their U.S. and corporate headquarters in Atlanta, Georgia.”

If you want to read some further initial insight into what the deal means, do read the article from Jason Busch at Spend Matters US here.

In summary, he sees this as a positive deal for all parties really. b-pack have strong technology in the P2P space, but have lacked some “commercial savvy” which has restricted their growth rate. But they have “great technologists”. Selectica can now offer the end to end suite capability, across P2P, sourcing, spend analytics, and CLM (contract lifecycle management).

However, the different elements will not initially at least be well integrated. Jason draws a parallel with SciQuest, who have also put together a range of firms and are gradually putting them onto a common platform. Selectica will have the same challenge, and until then may look “a bit like Frankenstein’s S2P suite monster architecturally.”

But Jason’s summing up is positive.

“In the meantime, we congratulate both parties on the transaction and see it as a strong net positive for customers and the overall market. At the very least, it will give the b-pack assets significantly more market exposure and a chance to compete with a strong sales and marketing organization behind it. Increased P2P competition will benefit the entire market”.

We add our congratulations and do read Jason's whole post here – it contains lots more good stuff!

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