CFO stack (expense management, next-gen FP&A)
Potential sellers: Zip ($1.2 billion valuation in May 2022, per TechCrunch); Tradeshift ($2 billion-plus in December 2021, per TechCrunch); Melio ($4 billion in September 2021, per Reuters); Ramp ($8.1 billion in March 2022, per Reuters)
Potential buyers: BILL; Anaplan; Adaptive; Coupa; Duck Creek; Avalara
What it is: The CFO stack is a toolkit that chief financial officers use to manage the financial operations of a company.
Why it’s on the market: Specifically within the CFO stack, tech connected to billing and financial planning and analysis (FP&A) are up for grabs, according to the partner at the California firm. Existing leaders in the market are all potential buyers.
“Whether it’s Bill.com, Anaplan, or Adaptive — any of these sorts of businesses — and even some of the expense management legacy platforms are potential buyers,” the partner said. “These are software businesses that, relatively speaking, have held value better than ‘fintechs’ have.”
Private-equity-backed players in the space are also poised to grow via acquisitions of smaller players, F-Prime Capital’s managing partner David Jegen told Insider.
“For the last year, I have expected PE investors to take advantage of the public market valuation correction to buy scaled fintech players, and then in turn use them as platforms to acquire even more private companies,” Jegen said.
This so-called “roll-up strategy” is ripe in fintech, Jegen said, because large PE firms have been active in the space.
In 2022, Thoma Bravo acquired Coupa for $8 billion and Anaplan for $10 billion; while Vista Equity Partners acquired Avalara for $8 billion and just completed its acquisition of Duck Creek for $2.6 billion. All four acquired companies will become acquirers of other private companies, Jegen predicted.
For example, Coupa plays in the expense management space, which has received more than $30 billion of private investment over the last five years and produced dozens of startups, Jegen said.
It would make sense for Coupa to build out its suite of offerings by acquiring private companies operating in interesting, adjacent spaces, he said. The corporate-card space with Ramp, accounts-payable workflow via Melio, and procurement, via Tradeshift and Zip, all make for attractive targets, Jegen added.
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