Mesh CEO Oded Zehavi analyzes the possible motivations behind Amex's proposed Center acquisition.
American Express on March 6 announced its plans
to acquire Center, a spend management platform. The news took the fintech
ecosystem by surprise, especially given the rumored $600 million price tag,
which closely aligns with Center’s last funding round valuation. This valuation
suggests a high revenue multiple, considering Center’s estimated $25 million
revenue run rate.
Industry Reactions and Analysis
The acquisition has sparked intense discussion among
industry experts, including Nik
Milanović , Art Levy
, and Sheel Mohnot , who
have attempted to decipher Amex’s rationale behind this deal. Even ChatGPT
weighed in, suggesting that the move aims to enhance American Express’s
services for small- and medium-sized businesses by integrating Center’s
real-time expense tracking and automation technology. The goal, seemingly, is
to combine Center’s software with Amex’s corporate and small business cards,
creating a seamless expense management ecosystem and fortifying Amex’s
leadership in commercial card payments.
However, the deal raises several questions. Unlike Ramp and
Brex, which dominate the spend management space with significantly larger
operations, Center was relatively small (10 to 20 times smaller), lacked
technological sophistication and had minimal traction in the lucrative tech and
high-growth startup segments. Instead, it primarily catered to underdeveloped
markets that bigger players ignored.
Additionally, Amex already had been publicly partnering with
Airbase —a far more advanced expense management solution. Airbase was widely
considered Amex’s expected acquisition target, yet it ultimately ended up being
acquired by Paylocity. Given Airbase’s deeper integration with Amex’s ecosystem
and its previous offering to Amex customers, the decision to acquire Center
instead of Airbase has puzzled many industry observers.
Furthermore, Extend, another Amex partner in the virtual
card and expense management space, was also seen as a more natural fit. With
its existing integrations and infrastructure tailored to Amex-issued cards,
Extend appeared to be a logical acquisition target, yet Amex chose to pursue
Center instead—raising further questions about the strategic motivation behind
this move.
Déjà Vu: A Pattern in Amex’s Acquisitions?
This isn’t the first time an Amex acquisition has left the
industry scratching its head.
In January 2023, American Express acquired Nipendo, a
relatively unknown Israeli B2B payments automation company with just a few
million dollars in revenue and a client base mostly composed of non-tech
Israeli businesses. Despite its lack of a clear strategic fit, Amex reportedly
paid nearly $100 million for the acquisition. Less than two years later,
Nipendo appears to have reverted to an independent company, with no visible
integration into Amex’s ecosystem.
Given this history, the Center acquisition raises similar
concerns: Was it a strategic investment, or is Amex once again overpaying for
an underwhelming asset?
The Steve Singh Connection
One possible explanation lies in Center’s leadership. Steve
Singh, the founder of SAP Concur, led Center alongside his son, Naveen Singh
(CEO of Center). Steve has had a decades-long relationship with Amex, dating
back to Concur’s partnership with Amex in the early 2000s.
Singh, a pioneer in the travel and expense management space,
has long envisioned a fully integrated business travel ecosystem, often
referred to as "The Perfect Trip."
To bring this vision to life, he backed Direct Travel, a
top-10 North American travel management company, and took over as CEO of
Spotnana, a modern travel booking platform, in June 2024. His goal? To
challenge Navan and TravelPerk, both of which have raised hundreds of millions
of dollars and established dominant brands in the post-Covid business travel
sector.
A successful Navan IPO could further disrupt the space,
creating urgency for competitors to solidify their positions.
Why Would Singh Sell Center to Amex?
If Singh’s vision revolves around a fully automated
corporate travel experience, why would he sell Center now? Several
possibilities emerge:
1. Direct Travel’s limitations in competing against Navan
and TravelPerk
- Navan
has positioned its integrated travel and expense platform as a key
differentiator.
- TravelPerk
is following a similar strategy, emphasizing the need for seamless expense
integration.
- Center,
however, is not an enterprise-grade or globally scalable solution.
- To
compete in the midmarket and enterprise segments, Singh may have realized
that he needed to build a new expense platform from scratch or partner
with a more robust player—which wouldn’t be possible while owning Center.
2. A strategic move by Amex to defend against competitor
disruptions
- Amex
has been watching its biggest partners, American Express Global Business
Travel (which it spun off in 2014) and SAP Concur, lose market share.
- Customer
dissatisfaction with Concur is growing, and GBT faces increased
competition from modern alternatives.
- Meanwhile,
Navan, TravelPerk and other next-gen card and expense platforms are not
partnering with Amex—leaving Amex without a strong foothold in this
evolving market.
The deal with Steve could be the first step in a broader
strategy to counter these threats, possibly involving a deeper partnership.
What’s Next for Corporate Spend Management?
The corporate travel and expense market is at a
turning point. Fortune 500 companies are now issuing RFPs to modernize their
T&E stacks, having put such investments on hold since the start of Covid.
New players are positioning themselves as the future of
corporate spend, while banks and payroll companies (except for Paylocity) are
still figuring out how to adjust to shrinking total addressable markets in an
increasingly automated workforce.
One thing is certain: exciting transformations lie ahead in
corporate travel, expense, and spend management. Amex’s bet on Center could
either pay off strategically or become another Nipendo-style acquisition that
quietly fades away.