Aravo: The Last of the Independent Supplier Information Management Mohicans?

There's a good chance that two of the key players in the supplier information management/supply base management market will be snapped up this quarter, given the current M&A buzz in the market. Plus, at least one more provider I'm aware of is either attempting to raise its next round of funding and/or investigating its strategic options. Of the two that are actively being shopped, neither represents what I'd define as a distressed asset, and one is actually a highly profitable little organization.

Yet the fact that these three providers are seriously considering exit strategies at this phase combined with the recent M&A activity in the sector and other areas suggests to me that the supplier Information management marketplace might eventually be subsumed by broader suite vendors. At least one of the leading vendors in the market, however, has no plans to sell out. At least not at this point.

I recently caught up with Aravo's CEO Tim Albinson and he believes that his sector and firm can continue to thrive independently. Tim stated, "Aravo coined the acronym SIM in 2005 and we have been the lead pioneer and innovator in the SIM market ever since." But what of Aravo remaining independent? "With all the M&A buzz and activity in the space we want to get the message out that we have every intention of remaining an independent, pure-play SIM company -- a true best of breed firm with a laser focus on SIM, risk, performance and sustainability," he remarked.

What's up Aravo's sleeve? Tim notes, "we have a new product launch planned later this year that will once again push the SIM market in new and exciting directions, and will continue our longstanding tradition of market leadership and innovation. We have spent two years and >$5 million on this new product and we are very excited to introduce it to the market."

When it comes to revenue, customers and investment, Tim suggests that Aravo has "no debt and no need for new capital, and every intent of aggressively attacking the market and growing our business for the long term. We have a strong balance sheet and have doubled our revenues the last two years running. Our $27 million Series D round was led by Cisco, the Charles Schwab family and Bill Harrison (former CEO/Chairman, JPMorgan Chase), and closed less than a year ago. Our global clients include GE, J&J, Cisco, Schwab, Goldman Sachs, and Deutsche Bank and over 1.5 million suppliers use our application. Most importantly, we are excited about the growth opportunity in our SIM and risk management businesses and we're looking forward to a great Q4 and 2011."

I'm not one to print statements from CEOs as a general rule. But if two or three of Aravo's current competitors end up being snapped up, they could very well be the last pure-play, cross-vertical supplier information management provider with any scale standing in North America (Europe, with Xcitec and SupplierForce, is another geography entirely -- not to mention the gorilla (with global ambitions) of the market from a hybrid solution perspective, Achilles). This fact alone makes Tim's statements that much more interesting to scrutinize without another lens layered on top.

In 2011, if Aravo is one of the last independent supplier information management vendors standing, the question for customers will be whether or not such capability is better delivered in tandem with P2P, spend analysis and/or sourcing, or independently -- or perhaps better delivered by an independent SIM vendor like Aravo.

I have my thoughts, but what do you think?

Jason Busch

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