In business as in life, timing is everything.
No sooner had I completed a 2-Part guest post for the Buyers Meeting Point Blog (Part 1 and Part 2), regarding the recent news that SciQuest had acquired CombineNet, and this morning I receive word from our newest sponsor Xchanging that they have acquired MarketMaker 4 (MM4), a Chicago-based provider of online sourcing and negotiation solutions. Of course this is where the similarity with the respective acquisitions both starts and ends.
As you will undoubtedly note in my posts regarding SciQuest, I talk about an acquisition pattern which appears to be largely fueled by a flagging revenue stream as opposed to a robust and proactive expansion of a successful business model. You merely have to refer to the Trinity Ventures acquisition of SciQuest back in 1999 when the company was on the verge of “shutting its doors,” and the present-day acquisition of CombineNet against the backdrop of the cancellation of two major contracts by the states of Oregon and Colorado that will have significant financial implications, to understand my half empty cup analogy.
Now compare this to the fortunes of Xchanging in the context of the news that they were buying MarketMaker4. Specifically, the following excerpt from the e-mail I received informing me of the deal:
The strategic acquisition also represents continued strong momentum in North America for London-based Xchanging and the company’s Xchanging Procurement Services division, the third largest procurement services provider globally behind IBM and Accenture. Xchanging Procurement Services has increased its North American customer base significantly in 2013, thanks in part to its strategic hire of Marie Meliksetian, a former senior leader from IBM’s procurement practice, who now leads the division in North America.
As the above commentary indicates, there is a world of difference between a cup that is half-full and on its way towards overflowing the brim (re 3rd largest provider, significant increase), and the aforementioned half empty SciQuest cup.
Given that history has shown that the majority of all M&As fail to deliver the expected benefits, which of the two scenarios is likely to buck this trend.
To me the answer is fairly obvious.
I will be interviewing a senior executive from Xchanging next week to delve into the details behind the MM4 acquisition and what it means for both companies as well as the North American market. Stay tuned for the link to that radio segment. In the meantime, I would invite you to learn more about Xchanging by listening to my September 11th interview with the company’s VP Business Development, Marketing and Advisor Relations Indy Ghosh (Xchanging’s Transformational (Out)Sourcing Model).