The M&A Dilemma: To buy or not to buy that is the question by Jon Hansen

Posted on February 13, 2015


 In December I wrote a post titled IBM’s plans to corner or corral the cloud – it’s all a matter of governance based on my interview with IBM’s Pete Wharton.

Wharton talked about the company’s “plan is to create an ecosystem of technology partners to extend IBM’s service capabilities to its customers.”  

So here is the question; why the acquisition as opposed to following a similar track to that of IBM re strategic partnering?  Specifically, why does Zen’s acquisition by Coupa work better than a strategic partnership between the two?

Earlier this week I wrote a post regarding Coupa’s acquistion of ZenPurchase, referring to it as the “perfect marriage of two trailblazers.”

I then proceeded to share my interviews with both Coupa’s CEO Rob Bernshteyn and ZenPurchase Founder and CEO Sunny Manivannan.   Although nearly five years apart, within the interviews one could see the potential synergies in terms of the vision and enthusiasm demonstrated by each CEO for what Gartner would eventually call the Postmodern ERP Era.

These now timeless synergies were confirmed by the following response I received from Manivannan, regarding the impact that the acquisition would have on his four-point 2020 Vision.

Point 1 – Enterprise procurement should be as intuitive as consumer purchasing.

There is so much innovation happening today in consumer purchasing (e.g., Apple Pay), with the goal of making the end-to-end process frictionless for the end user. Coupa is leading a similar movement in enterprise procurement. ZenPurchase will help Coupa double down on providing a seamless B2B purchasing experience, no matter who you are, where you are, or what device you’re using. We do this by enhancing simplicity, speed, and real-time collaboration across the single, unified Coupa platform.

Point 2 – Every company in the world has access to vendor-quality benchmarks.

There is so much data out there that never sees the light of day because it exists across disparate systems. We want to make data the star of the show again. With Coupa’s unified, organic suite, we finally have the opportunity to synthesize important data and deliver powerful insights directly to our customers. This includes insights and analytics about spend optimization, supplier quality, best practices, and much more.

Point 3 – Speed of business increases rapidly even as supply chains become more global.

Just like ZenPurchase, Coupa is focused on enhancing collaboration across all the stakeholders in enterprise procurement, with the end goal of improving speed and simplicity. When our customers can work together seamlessly no matter where they are in the world, they achieve impressives outcomes.

Point 4 – Customers see the procurement function as a top source of competitive advantage.

Spend management, when done well, can make a massive impact on a company’s profitability and competitive advantage in the marketplace, and the C-suites at some of the world’s largest companies have known this for a long time now. In addition to simplified spend management, we see a massive opportunity to help Coupa customers drive competitive advantage by improving their internal processes, removing unnecessary friction and breaking down barriers in order to help companies perform at peak levels every day.


Given Manivannan’s perspective on how his company’s acquisition by Coupa impacts the original vision for ZenPurchase, I have little doubt that the future is indeed bright.

However, and in the context of the fact that the majority of M&As fail miserably, coupled with my interview with IBM’s Wharton regarding the structure of a “technology partner ecosystem,” I could not help but wonder if an acquisition was the best route to take.

Having been the CEO of a company that was acquired for $12 million back in the days of the boom, as well as covering first hand numerous acquisitions that were long on promise and short on returns, does the M&A route make sense?  If it does, why?

As before, I will keep you posted.


Posted in: Commentary