Oracle and SciQuest – Addressing the Rumors From a Corporate Development Perspective

I feel compelled to chime in on this story, reported by Jon Hansen, suggesting Oracle is acquiring SciQuest, for a number of reasons.

Let me start with some skepticism founded on Oracle and the rumor, and not on SciQuest.

First, having spent much of my career around M&A, including working in corporate development at one stage – and knowing how well buttoned up Oracle's corporate development efforts are, especially compared with others – if Oracle was acquiring SciQuest, a maximum of 3-5 people would know about it within SciQuest under a normal situation.

There are many ways to do due diligence, even on the product level, without setting off alarm bells internally. I highly suspect that if there is anything like a leak, it is a person setting off rumors versus one involved in any sort of transaction with material knowledge of it.

Second, on the surface, the deal would make complete sense for a lot of reasons if you did not know Oracle’s corporate development model. At around $100 million in revenue, SciQuest would be a relatively small acquisition for Oracle – quite small in fact. I suspect it would need to get blessed by folks outside of corporate development given the size, as well as other reasons I won’t get into here, given how much Oracle looks for certain attributes in acquisitions.

Third, corporate development people typically aren’t rewarded for doing good deals. They get fired for doing bad deals, or even deals that are good but go bad in the end. The chance of any deal actually making it through a process is slim, and there is transaction attrition at all stages. Even if there were rumors and a process has started, the chance of it making it through to the end is less than what anyone who has not been through dozens or hundreds of transactions would guess. Much less.

Now, having said all this, if I were in corporate development at Oracle and I were allowed to look outside the numbers and get special permission to pursue the deal, it would be very easy to build a compelling case – vertical and industry synergies, public sector synergies and strengths, capabilities in relative areas where Oracle is weaker, the SAP/Ariba question and Oracle rivalry, as Jon Hansen points out and more.

But most important, one should keep in mind informal discussions happen all the time between executives and boards, and that talk is just talk, and rumors are just rumors. If the corporate development team is not engaged, it’s only that – a rumor.

And on the chance that the corporate development guys and gals actually do get involved in a process – with SciQuest or anyone else – it’s far easier to say “no” than “yes” to just about any deal.

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Voices (4)

  1. Melissa Edward:

    The Oracle RDBMS stores data logically in the form of tablespaces and physically in the form of data files (datafiles). Tablespaces can contain various types of memory segments,such as Data Segments,Index Segments,etc. Segments in turn comprise one or more extents. Extents comprise groups of contiguous data blocks.Data blocks form the basic units of data storage.

  2. Bill P.:

    Thanks Jason. Always appreciate your writing and responses.

  3. Jason Busch:

    IBM is committed to the Coupa partnership now … there’s also a history between the two organizations. Of course things can change, but that’s not one I see … and I usually call these things at least acceptably well if they’re close to home (e.g., got SAP buying Ariba right, Ariba/SAP buying FG, etc.)

  4. Bill P.:

    Well, Jon was at it again last night with something that had a little more evidence to support some of his claims. What do you think of IBM as a potential buyer of SciQuest? Would it even make sense with the technology package that IBM already offers? Here is the article link:

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