Is the acquisition cup half full or half empty: Xchanging and SciQuest One Year Later by Jon Hansen

Posted on October 29, 2014


A year ago this past September 20th, I wrote the post titled Is the acquisition cup half full or half empty: A tale of two takeovers!  In it I talked about the stark differences – at least they were stark to me – between the Xchanging acquisition of Chicago-based MM4, and the purchase of CombineNet by SciQuest.  You can read that post in its entirety through the provided link.

The long and the short of my review is that Sciquest’s acquisition strategy was largely fueled by a flagging revenue stream as opposed to Xchanging’s robust and proactive expansion of a successful business model.

Since that original post, I have written about the tangible win the Xchanging – MM4 partnership delivered in the form a a major contract win with Severn Trent Services just a short two months later.

On the flip side, I have written about SciQuest’s lost contracts with the States of Colorado and Oregon, their questionable practices relating to hyped-up press releases, and the propensity on the part of their CEO to dump his shares in the company with surprising frequency.

Perhaps it is no small irony that when I caught up with MM4 CEO Dave Bowen earlier this week on my PI Window on The World radio show (The Xchanging – MM4 Acquisition: One Year Later) to talk about the continued success of the Xchanging – MM4 acquisition one year later, the only notable news regarding SciQuest this same week was that their CEO had unloaded more shares just before the stock price hit a new 52-week low.

Putting aside the reference to one research analyst who has rated the stock with a hold rating, and the other two who actually rate it as a buy – and you wonder why the public has little faith in analysts and the stock market in general – there has not been a whole lot to wave the flag about regarding the SciQuest – CombineNet acquisition.

So here is the question . . . why is the Xchanging – MM4 partnership producing dividends, while the SciQuest “acquisition” lists in relative obscurity?

Dave Bowen certainly provided some interesting insights into why the Xchanging deal is working so well.

Conversely, one can only wonder what SciQuest’s Stephen J. Wiehe has to report given that he appears to be using what some experts have called a legal loophole around insider trading restrictions based on the  10b5-1 plan.  For those who are unfamiliar with the 10b5- 1 plan, it is an automated plan that insiders such as executives “put in place when they don’t have inside information, and that sell stock in the future according to fixed instructions”.

The problem according to Bloomberg View columnist Matt Levine, is that there is the possibility of an executive holding back on the disclosure of good news until they are just about to sell under their 10b5-1 plan, or holding back on bad news until just after their shares have sold.

Regardless of what may or may not be going on behind closed SciQuest doors, one thing is certain; I would rather do business with a company whose executives are more excited about the acquisition a year later , such as with Bowen and company, as opposed to one who is unloading his company’s shares per Wiehe.

With whom would you rather deal?

The SciQuest Cup . . .

The SciQuest Cup . . .


Posted in: Commentary