Will Coupa Float? And Would That Be a Good Thing?

The news last week that Coupa, the spend management business, has appointed advisers with the view to a flotation of the business on the stock market later this year caused much comment in the procurement blogosphere. According to Reuters, Coupa apparently has hired a lead underwriter (Morgan Stanley) and secondary bookrunners.

“San Mateo, California-based Coupa, which said last year it was valued at $1 billion in a private funding round, has already registered for an IPO confidentially with the U.S. Securities and Exchange Commission and could file its IPO prospectus publicly in the fall,” the story says.

As usual, the most incisive commentary came from our own Spend Matters US colleagues, with Jason Busch writing this excellent piece – “5 Reasons Why a Coupa IPO Would be Good for Procurement”. For example, he says it would be a “vote of confidence” in our sector's software industry.

“A Coupa IPO would be a vote of confidence in the broader procurement sector for investors. Investment drives innovation, which in the end benefits customers the most (and creates a virtuous cycle of new technology and new vendors). A liquidity event of this scale would help fuel future start-ups by expanding funding options and, potentially, valuations”.

He also suggests the float of Coupa as an independent firm would be better for customers and future customers than the other options. We strongly agree that this looks like a better option for customers than Coupa being swallowed up by one of the giant software firms. To be fair, SAP has allowed acquisitions like Fieldglass and Concur, even Ariba, to retain some identity and has not stinted on investment.

However, Oracle does not seem to have procurement high on its priority list – although presumably if the firm bought Coupa that would indicate a change of strategy. And the jury is still out (but the judge is checking where his black cap is stored) in terms of whether IBM purchasing Emptoris was good news. But all in all, generally the customer is better served by more competition rather than less, assuming Coupa floats in a manner that enables the firm to continue investing.

Jason is a positive thinking American of course, so we should raise one more possibility that he does not mention. If the IPO did not go as well as hoped, then that might act as a bit of a kick in the teeth for other procurement solutions providers, whether already public or thinking about a similar step. There’s no reason to think it won’t succeed, but markets are volatile and who knows what is round the corner. In a world where the chap who writes rude limericks about a major ally of the UK becomes Foreign Secretary, and then that country suffers an unsuccessful coup attempt, then anything (and we mean anything) can happen.

Do read all of Jason’s excellent article here, and let’s hope it is all plain sailing for Coupa. Aside from other considerations, we look forward to interviewing their European “employee number 1” over an extremely good lunch when the float makes him and many other Coupa people really quite wealthy!

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