THINK IT Services

Given the proliferation of Software-as-a-Service (SaaS) and cloud computing players over the past year in response to the rapid rise of customer interest and demand, it was easy to predict that a shake out in the on-demand services market was inevitable. The question is whether today’s turbulent economic environment will accelerate this shake out process and kickstart a series of mergers and acquisitions heading into 2009.

One school of thought is that many of the weaker players in the on-demand services market are not mature enough to attract buyers and, therefore, the volume of acquisitions will not be any greater than normal.

Compounding this situation is the fact that many potential acquirers are facing their own financial challenges and lack the currency to take advantage of a “buyer’s market” and make acquisitions.

I’m not an expert in the art and science of M&As, that’s why I’ve established alliances with key players in this business. But, I am intimately involved with many on-demand service providers who recognize that they must strengthen their competitive positions in order to survive and succeed in an increasingly challenging economic climate and competitive landscape.

Therefore, a number of companies are looking at ways they can expand their market penetration via acquisition. For instance, I’ve have the privilege of serving as a senior advisor to Triple-Tree, LLC, which has seen a significant uptick in its pipeline of deals over the past few months. Triple-Tree has announced two deals in the past week alone,

• Paisley–a governance, risk and compliance SaaS vendor–has signed a definitive agreement with Thomson Reuters, a provider of intelligent information for businesses and professionals. Thomson Reuters is acquiring Paisley to provide customers a ‘one-stop’ compliance management and internal financial control solution.
• SearchAmerica–a provider of payment prediction data and analytics to the U.S. healthcare industry–has been acquired by Experian, a global provider of information, analytical, and marketing services to organizations and consumers to help manage the risk and reward of commercial and financial decisions. The acquisition will permit Experian to extend its Credit Services and Decision Analytics activities in North America to help healthcare providers manage their billings and cash flows.

These were not ‘asset’ sales. Instead, they are deals which enable the respective acquirers to expand their portfolios and market reach, and permit the acquired companies to achieve a solid exit. These transactions also typify the blurring of the lines between software, business and information services sectors.

You can expect to see a steady stream of these deals through 2009 as the on-demand services industry evolves and is reshaped by broader macro-market trends.