Investment banking firm naming IBM as a possible SciQuest suitor makes one wonder? by Jon Hansen

Posted on July 8, 2015


“If operations continue to improve, we view potential buyers to be IBM, Oracle, salesforce, NetSuite, and Workday.” – Northland Capital Markets article


Let’s put aside for a moment the fact that boutique investment banking firm Northland Capital Markets “initiated coverage on SciQuest (NASDAQ: SQI) with an Outperform rating and a price target of $20.00.”

Beyond their optimistic outlook, let’s also overlook the fact that some of their coverage reads more like a marketing brochure for SciQuest, than it does an unbiased assessment of the company’s actual position.

This of course might be easier for me, as I have become somewhat numb to the advice of investment banking firms. Check out my November 29th, 2014 post Are investment bankers and Wall Street bad for business? to understand why.

However, what did catch my attention, was their identification of IBM as part of a group that also included Oracle, salesforce, NetSuite, and Workday, as a possible suitor for SciQuest.

Why you might ask did the reference to IBM stand out?

This past December, I had the chance to talk with IBM’s Commerce Solutions Product Marketing Leader, Pete Wharton.

The focus of the interview was on Big Blue’s interest in creating an “ecosystem of technology partners to extend IBM’s service capabilities to its customers.” Or as Pete put it, IBM is simply looking for the best way to serve their clients interests by “unifying” a “segmented solution world” through a very active “partnership acquisition” strategy.

There was no talk about acquiring companies, nor was there any suggestion that IBM was planning to do so as part of this initiative. By the way, you can read about the interview through the following post IBM’s plans to corner or corral the cloud – it’s all a matter of governance.

Now I know that a few may point to the somewhat lengthy history between the two companies as the basis for IBM’s inclusion as a possible suitor. Some may even consider the fact that SciQuest’s new CFO, Jennifer Kaelin, who was a financial analyst for IBM from 1997 to 1998, could be a factor.  However, I am still not convinced that IBM should be on this list of candidates.

Given that the majority of M&As fail to live up to expectations, coupled with the numerous challenges that SciQuest has faced over the past year or two, I just don’t see a strategic fit. Especially in terms of corporate culture.

As for the other three companies – salesforce, NetSuite and Workday well . . . let’s just say that the jury’s still out.

All this being said, and given the tone of the Northland article, creating interest where none exists would not be surprising. Think about it for a moment, what is the best way to get a better deal from a real suitor?


Posted in: Commentary