Selectica and Iasta to Merge: Stealth IPO for Sourcing Provider, Suite Expansion for Contract Management Leader [Plus+]

After market close today, Selectica, one of the few leaders in the contract management market, announced its intent to merge with Iasta, a sourcing suite provider that has also managed to different insight and reach profitable growth, albeit in a much more crowded field.

At its core, the transaction represents a “stealth IPO” for Iasta and dramatic expansion of Selectica’s value proposition and target customer set. Iasta will now have a public currency, without having to go through the initial filing process (Iasta was also too small, by US standards, for a typical NASDAQ listing, although smaller competitors, such as Rosslyn Analytics, have recently floated on the AIM).

With the completion of the deal, in addition to the $7-million cash consideration as part of the acquisition, Iasta shareholders will hold 1 million shares of Selectica stock. Selectica also notes in a Q&A on their website that “in addition, in connection with the acquisition, Selectica would provide grants of options to purchase 700,000 shares of its common stock to the employees [of Iasta].” Prior to the transaction, Iasta was privately held by its three founders, David Bush, Jason Treida, and Todd Epple, which basically means each of them now has significant skin in the game in a public company.

In this Spend Matters Plus research brief, Managing Director Jason Busch and Chief Research Officer Pierre Mitchell discuss the comparatively low valuation, the deal highlights, and key questions that the deal brings up. Is this a combination that could change how we look at procurement?

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