On Tuesday, after the market closed, SciQuest (ticker: SQI), a provider of cloud-based supply management solutions, announced that it had signed a definitive agreement to acquire Upside Software Inc. (“Upside”), a provider of Contract Lifecycle Management (CLM) software in what it describes as an “asset purchase” for approximately $22 million in cash. The deal is expected to close in two weeks, which is fast, even for small, private company deals like this one.
About SciQuest: Founded in 1995, SciQuest has had quite a history, gaining notoriety and fame during the internet bubble era only to be taken private after the crash (in 2004) where it reformulated its model and emerged as cloud-based player in the Procure-to-Pay space with a strong presence in several verticals. SciQuest went public (again) with an IPO in September of 2010 and has used part of the money raised to acquire two companies – AECSoft (in January, 2011) which allowed it to add supplier information management and eSourcing solutions to its offering and now, Upside. SciQuest has a client list that is heavily weighted in higher education, life sciences, and the public sector but has recently stated that it plans to take a more horizontal approach to the market.
About Upside: Founded in Canada in 2000, Upside Software is a privately-held provider of Contract Lifecycle Management (CLM) solutions. It offers a robust feature set and is one of the largest CLM “pure-plays”with approximately 130 customers and 150 employees.
According to the deal announcement, a company distributed FAQ list, and an investor/analyst call held on Tuesday evening:
- The purchase price of this transaction is approximately $22 million which will be paid in cash
- SciQuest expects Upside to contribute approximately $5 million to non-GAAP revenue for the remainder of 2012 and approximately $15 million to non-GAAP revenue for 2013
- The Upside acquisition expands SciQuest’s CLM capabilities which were acquired in the AECSoft deal
- Upside has both an installed and cloud-based CLM offering
- Upside’s solution has gotten traditionally strong marks from industry analysts [Sidebar: this includes Ardent’s Vishal Patel, who has spent significant time covering the CLM space]
- “SciQuest’s stated strategy for growth has been and continues to be focused on enhanced offerings for Accounts Payable, Contract Lifecycle Management and Spend Analytics”
- SciQuest believes that buying Upside is a faster, more efficient way to deliver a CLM solution to the market than developing a solution organically
- Upside has “more than 100 customer installations” described as consisting “predominantly of Fortune 500 customers”
- There is “very little” current customer overlap so this deal provides “hundreds of cross-selling opportunities”
- SciQuest plans to sell the Upside solution as a standalone product and as part of its larger suite
- Although the deal was announced as an “asset purchase,” SciQuest expects the entire 150-person Upside team (except the founder) to join the acquiring company
We’ll return tomorrow with part two of our “instant analysis” on the deal after another call with the SciQuest team
Those interested in learning more about this deal may want to view these additional resources:
SciQuest President and CEO Stephen Wiehe’s short video announcement on the acquisition of Upside
Andrew Bartolini is the Chief Research Officer at Ardent Partners, an industry analyst firm focused on supply management (i.e. sourcing, procurement, accounts payable).
Disclosures: SciQuest is a client of Ardent Partners. The author holds no financial investments in any company mentioned in this article.