Author Archives: Jason Busch



About Jason Busch

Jason is the founder of Azul Partners, which he started in 2004. He is regarded as one of the leading experts in the scintillating world of procurement, finance and supply chain technologies. Jason currently serves as Managing Director of Spend Matters Nexus, which provides market intelligence, strategy support and due diligence advisory for private equity firms, CEOs and corporate development teams. Prior to Azul Partners, Jason got his on-the-job education in procurement solutions working at FreeMarkets in corporate development, strategic sourcing, marketing and other areas. Before that, he started his career in consulting and merchant banking. Jason holds undergraduate and graduate degrees from the University of Pennsylvania in English Literature and History.


Coupa’s Biggest Acquisition Yet (Part 1) — LLamasoft Transaction Overview, Initial Musings and Deal Tailwinds

Mergers and Acquisition News in procurement industry

Earlier this morning, Coupa announced it was acquiring LLamasoft in a $1.5 billion transaction (with the deal expected to close Nov. 2, 2020 — today). My colleagues on the analyst team at Spend Matters PRO are covering the transaction from a procurement and supply chain practitioner perspective. In short: what it is, why it matters and what it might bring product-wise from the combined organization. You can read Spend Matters coverage today here: the breaking news, PRO analysis of procurement-supply chain’s future and a PRO look at LLamasoft’s functional capabilities.

In this Spend Matters Nexus series, I’ll focus on covering the transaction from an M&A and competitive strategy perspective, providing analysis for a narrower audience interested in the transaction from an investor and corporate development vantage point.

Today, I’ll start with an overview of the deal (transaction overview + analysis), offer up some initial musings, and share some of the tailwinds that might support the deal as the combined organization takes its wares to market.

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and business strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter. Disclosure: Spend Matters’ parent company, Azul Partners, provided due diligence services to Coupa as part of this transaction.

You can’t optimize for products that are a rounding error in a broader P&L

In this counterpart article, Jason Busch argues against giving away optimization.

My colleague’s proposal is to give away optimization, when it is, in fact a form of differentiation for providers in the sourcing space. Until optimization becomes as “expected” as RFI/RFX or reverse auction capability in sourcing, I, personally, would actively discourage providers from simply tossing it in. But what I would deploy is clever marketing, channel, business model and go-to-market approaches to capitalize on the asset, if I had it.

What is driving Tipalti’s $2 billion valuation? 10 reasons AP Automation is such an attractive market

procurement

Yesterday, Tipalti announced it had raised $150 million at a cool $2 billion valuation. (See Spend Matters’ coverage of Tipalti below.*)

What is remarkable about this raise and the valuation is that Tipalti, which focuses on accounts payable automation and payments, is still a relatively small firm in the procurement and finance technology sector, even if it is growing at a strong clip.

While I don’t have current financials on the firm that I can share, Owler lists them (erroneously low) at $15 million, and applying the ever-convenient $200,000 or $250,000 per employee multiple based on LinkedIn employees still places them materially below $100 million in revenue.

So regardless of how you slice it, we likely have a private company here — and one that was founded outside the U.S., in fact, that can sometimes hurt comparative valuations — valued in excess of 20X top line.

For an outsider to this sector, barring truly off-the-chart growth metrics (beyond even top-performing cloud application norms), this might seem anomalous. But it’s not, given a number of variables at play here in the AP automation and B2B payments market.

In this Nexus column, I will share the “inside baseball” 10 reasons why AP is such an attractive market for firms and investors — and why Tipalti is smack dab at the center of any rationale investment thesis in this market (including a contrast with superior functional solutions for AP such as Basware, which is comparatively uninteresting from an investment vantage point).

* See Tipalti’s latest Spend Matters coverage and ratings below:

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and business strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter. Disclosure: Azul Partners has advised numerous sponsors and firms in support of M&A strategy and due diligence in the accounts payable automation and B2B payments sector.

10 Theories on Procurement Technology Venture Stage Investment (Thesis 6: Supplier Collaboration: Goodbye Tinder, Hello eHarmony)

In a series of columns this year, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market. For perspective, Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Thesis 3 looked at UI/UX technology and adoption in the start-up stage. Thesis 4 dug deeper into bridge solutions. Thesis 5 looked at push savings. 

Today, let’s dig deeper into the rise of supplier collaboration.

10 Theories on Procurement Technology Venture Stage Investment (Thesis 5: ‘Push’ Savings)

In a series of columns that stem from investing ideas that excite me, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market. For perspective, Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Thesis 3 looked at UI/UX technology and adoption in the start-up stage. Thesis 4 dug deeper into bridge solutions. Today, let’s dig deeper into push savings.

Oversight Systems — TCV acquisition, spend compliance intro and sector musings

Mergers and Acquisition News in procurement industry

On Wednesday, Oversight Systems announced that TCV, a private equity firm, had acquired a majority stake in the provider of spend compliance solutions from Luminate, the previous investor.

Oversight competes in the spend compliance market, a clever overlay that sits alongside — or on top of — source-to-pay process and data flows, primarily for indirect and expense-based spend. It augments the capabilities of spend management and T&E providers, although Coupa does have home-grown capabilities in this area as well.

Oversight largely grew under the radar in recent years, and it is not well known in the procurement and finance technology sector. But along with Appzen, Oversight has carved out a leadership position in this market (although there are material differences between the two providers).

While both providers are worthy of consideration for organizations looking to complement existing procure-to-pay and T&E investments, we’ll leave additional practitioner analysis to a PRO update in the months to come, and today will focus our Spend Matters Nexus coverage on explaining this market segment and how Oversight Systems slots into it. We’ll start with a back-of-the-napkin estimate on the transaction.

Related coverage:

CORONAVIRUS RESPONSE: Fraud, P2P and Vendor Management Safeguards — Protecting cash and rapidly vetting suppliers in a crisis 

Oversight Systems: Vendor Analysis (Part 1) — Background and Solution Overview

Oversight Systems: Vendor Analysis (Part 2) – Product Strengths and Weaknesses

Oversight Systems: Vendor Analysis (Part 3) — Competitive and Summary Analysis

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and business strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter.

10 Theories on Procurement Technology Venture Stage Investment (Thesis 4: Bridges)

In a series of columns this summer, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market.

Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Thesis 3 looked at UI/UX technology and adoption in the start-up stage. Now let’s dig into bridge solutions.

10 Theories on Procurement Technology Venture Stage Investment (Thesis 3: UI/UX & Adoption)

Oracle

In a series of columns this summer, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market. Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Today, we'll look at user interface technology in the start-up stage.

10 Theories on Procurement Technology Venture Stage Investment (Thesis 2: Marketplaces)

I love B2B marketplaces. At least intellectually. That’s why the topic of marketplaces is part of this series on early stage procurement technology investing. Thesis 1 looked at automation and vendors in that space, and today we’ll look at providers of marketplace solutions.

5 Themes That Excite Me About Procurement & Finance Tech Venture Investing

procurement

I’ve spent over 20 years studying the procurement solutions and technology market. A tremendous amount has changed in this time.

When I first wrote a column for Information Week about B2B negotiations and reverse auctions in early 1999 before meeting the founders of FreeMarkets — who convinced me to leave management consulting and join them — there were perhaps a dozen providers in the market with any commercial traction.

To say the sector has grown up is an understatement!

There are over 1,000 providers out there today that my Spend Matters colleagues track (a number that is growing weekly).

Besides the sheer growth, there are five key reasons I’m excited about this market today from a seed/angel and venture perspective. These are:

Coupa acquires BELLIN, targeting treasury management (Part 2: TMS Market, Competitors and TAM / Market-Sizing Considerations)

procurement

Last week, Coupa made the surprise move to push its business spend management suite into an adjacent space that no other source-to-pay, procure-to-pay or AP automation solution vendor has gone before: the world of treasury — and specifically, treasury management systems (TMS).

See initial Spend Matters Nexus and PRO coverage here:

By acquiring BELLIN to compete in the TMS world, Coupa will ostensibly fortify its position in being able to sell to CFOs as much as CPOs with a broader value proposition (including broader-based payment capabilities than all of its procurement/AP/spend peers can support, at least without a TMS partnership and development of new combined process flows).

But beyond the expanded CFO value proposition and B2B payment intersections, there’s quite a bit beneath the surface with a TMS that could create additional value propositions linked with transactional procurement, supplier management, risk management, invoicing and payment capabilities.

This Spend Matters Nexus brief provides a quick overview of treasury management system market dynamics, including buyer trends and requirements.

It also offers insight into the competitive positioning of some of Coupa’s key competitors in this new market segment, including CGI, FIS (Integrity and Quantum), Ion (City Financials, IT2, ITS, Openlink, Reval, Treasura, Wallstreet Suite), Kyriba, GTtreasury (GTreasury/Visual Risk), Oracle and SAP.

Lastly, the brief shares TAM estimates (total addressable market) for the treasury management and B2B payments market.

The final installment of this three-part Nexus series will examine potential competitive landscape implications for Coupa’s competitors in S2P and P2P, including SAP Ariba, Oracle, Basware, GEP, Jaggaer and Ivalua.

We also will explore the converse: Will treasury management systems providers “push into” the procurement and spend applications world?

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter and subscription service. Disclosure: Azul Partners provided due diligence services to Coupa as part of this transaction.