How Practitioner Clients Can Avoid The Pitfalls Of A ProcureTech Acquisition

Approximately 30% of ProcureTech solution providers are likely to take on clients they know have minimal chance for success, driven by revenue goals, market competition, and client pressure. This varies by provider maturity—established firms (e.g., Coupa, Ivalua) may hover closer to 20%, while newer entrants could exceed 40%. Without specific data, this estimate relies on industry trends and parallels, offering a plausible range of 20-40%.

The above metric isn’t typically tracked or disclosed by industry reports, ProcureTech providers, or analyst firms like Gartner, McKinsey, or ProcureTech.ai, as it involves subjective assessments of “success” and proprietary business decisions. However, I can provide an informed estimate based on industry dynamics, provider incentives, and analogous trends in the broader SaaS and tech solution markets.

The above said, here is an excerpt from the August 9th, 2024 post: Are we at the beginning of a procurement industry “brain drain?”

One thing is certain: far too often, rose-colored glasses are still being handed out as the car heads toward the cliff of yet another “bubble burst” in 2025.

All this being said, there is still a solid yet finite core of solution providers who choose their clients wisely and walk away from those they know have little chance of success. The 2025 sifting event will be challenging, reducing the number of providers by 75%. However, by “thinning out the herd,” practitioners and providers can build success through better communication and collaboration and the widespread adoption of the agent-based implementation model.

Takeaway: Procurement’s success is not a technology play – procurement success is people and process-driven.

Why Take On Clients Who Aren’t Ready

Factors Influencing the Estimate

1. Revenue-Driven Incentives:
   • ProcureTech providers, like most SaaS companies, operate in a competitive market (e.g., $7.3 billion in 2023, growing to $18.28 billion by 2032 per Fortune Business Insights). Many are startups or scale-ups reliant on venture capital (e.g., $500M invested in procurement tech startups over 5 years, per Digital Procurement World 2020), pushing them to prioritize client acquisition and revenue over long-term success rates.
   • Smaller providers or those in growth phases (e.g., ProcureTech100’s 5,000+ solutions) may be more likely to onboard risky clients to build market share, even if success is uncertain.
2. Client Readiness Variability:
   • Success in ProcureTech implementations often depends on client factors like data quality, process maturity, and adoption willingness. A 2023 Spend Matters report notes that 30-40% of procurement digitalization efforts fail due to poor internal alignment, not provider capability. Providers may knowingly accept such clients, betting on upsell opportunities or partial wins.
3. Sales and Risk Assessment:
   • Established players (e.g., SAP Ariba, Coupa) with mature sales processes likely screen clients for fit, rejecting those with minimal success potential to protect reputation and resources. Niche or newer providers (e.g., startups in the ProcureTech100) may lack such rigor, taking on riskier clients.
   • A 2024 Procurement Insights article suggests up to 25% of ProcureTech AI providers might not survive 2025 due to market pressures, implying some overextend by accepting shaky clients.
4. Analogous SaaS Trends:
   • In broader SaaS, churn rates average 10-15% annually (per Totango 2023), with some providers accepting clients they suspect will fail (e.g., 20-30% of engagements, per anecdotal VC insights) to hit short-term quotas. ProcureTech likely follows a similar pattern, adjusted for its enterprise focus.

---

Estimated Percentage

• Range: Based on these dynamics, 20-40% of ProcureTech solution providers likely take on clients they know have minimal chance for success.
  • Lower Bound (20%): Reflects established providers (e.g., Ivalua, ORO Labs) with selective onboarding, prioritizing high-fit clients to maintain ROI (e.g., 7,849% 10-year average from prior response) and reputation.
  • Upper Bound (40%): Captures newer or struggling providers (e.g., smaller ProcureTech100 firms) desperate for revenue, accepting clients with poor readiness (e.g., legacy systems, resistance to change per Prewave 2025).
• Best Guess: 30% is a reasonable midpoint, balancing profit motives with practical limits (e.g., resource constraints deter taking all risky clients).

---

Reasoning

• Evidence Gaps: No direct survey exists (e.g., “ProcureTech providers admitting low-success clients”). However, Procurement Magazine (2024) notes rapid evolution in ProcureTech, with providers adapting to diverse client needs, suggesting flexibility in acceptance.
• Market Pressure: With 400-600+ solutions (Pure Procurement 2025), competition drives risk-taking. A 25% projected failure rate for AI ProcureTech by 2025 (Procurement Insights) implies some overreach, including onboarding marginal clients.
• Client Perspective: Buyers often push for adoption despite readiness issues (e.g., 30% failure rate, Spend Matters), and providers may comply to secure contracts, hoping to mitigate risks post-sale.

How Does An M&A Impact A ProcureTech Provider?

• On balance, 20-40% of acquired ProcureTech firms may face significant negative effects, with the rest leveraging benefits like scale, though no precise percentage is universally tracked. The outcome hinges on execution and alignment with the original value proposition.
• Being acquired can erode trust, agility, and service quality if poorly executed. For procurement teams, it’s wise to ask tough questions post-acquisition and monitor changes closely.
• Overall, while acquisitions can bring benefits like increased resources and market presence, they also pose risks that can negatively impact the acquired company’s operations and reputation.
• While acquisitions can bring potential benefits such as increased resources and market reach, they also pose significant risks that can negatively impact the ProcureTech solution provider’s culture, strategy, customer relationships, innovation, resource allocation, and brand identity.

Across all industries and contexts, 70-90% of mergers and acquisitions fail to meet their intended objectives, with a consensus around 70-75% for value destruction (per Fortune 2024) and up to 90% when including strategic or operational shortfalls (per HBR). For a mid-tier estimate, around 80% aligns with multiple sources (e.g., KPMG’s 83%, posts on X citing 80%). This high failure rate underscores challenges like inadequate due diligence, cultural misalignment, and post-merger integration—issues consistently highlighted in ProcureTech and broader M&A discussions. Exact percentages depend on specific criteria, but the 70-90% range is a widely accepted benchmark.

TODAY’S TAKEAWAY

In my 40-plus years in high-tech and procurement, I have seen and even been involved in many M&As. While customer interests are always “part of the overall equation,” the one constant I have seen throughout my career is that customer success often takes a backseat to the following interests:

• Expanding market share through a merger or acquisition
• Meeting increased revenue expectations (I will have to tell you the Oracle sales rep story)
• Increasing share price or stakeholder investment

In my next post, I will provide a due diligence checklist of questions to ask a vendor post-acquisition.

30