Certify and Chrome River are joining forces in a merger that
could significantly alter the competitive landscape of the expense management
market. Effective immediately, the merger involves the creation of a new
holding company, with a majority stake held by Certify parent company K1
Investment Management. Additional shareholders include Certify and Chrome
River's founders, and Bain Capital Ventures also holds an interest. The transaction is valued at more than $1 billion, according to the companies.
Combining with Chrome River enables Certify to expand its
business offering to large and enterprise clients, an audience that previously
hadn't been a major focus area, noted Certify CEO and co-founder Bob Neveu. "The
midmarket and SMB clients have really been the sweet spot for us," he
said. "We didn't really have a presence in the larger enterprise area, and
Chrome River has done a fantastic job executing in that space."
Portland, Me.-based Certify and Los Angeles-headquartered
Chrome River will continue to operate independently with separate management
teams but will combine efforts to accelerate investments in technologies like machine learning, artificial intelligence and analytics. The combined company will serve more
than 11,000 corporate customers across more than 100 countries.
Maintaining existing brands has been a hallmark of Certify's
expansion strategy since K1 Investment acquired a majority stake in the company
for $125 million in 2017. That deal that merged Certify with three other
expense management firms. Since landing that capital infusion, Certify has been
on something of a buying
spree, including acquiring expense management specialists Abacus
and Spain-based Captio,
both of which continue to operate under their own brands while being supported
by a larger ownership entity.
Neveu said that strategy enables the company to offer an
alternative proposition to that of industry giant Concur, which offers a more
one-size-fits-all approach, he said. "We see the opportunity to offer a
distinct solution for clients in particular market segments and leverage that
capability to grow and compete against Concur and others," he noted.
Chrome River CEO and co-founder Alan Rich echoed that
sentiment. "I see the analogy in accounting software, where you have SAP,
Microsoft Dynamics and QuickBooks, all addressing a particular kind of
customer," he noted. "That's what we think we can do, combining strong
scale and common technology to offer solutions that will meet all customers'
needs."
The cloud-based expense management software market is growing
by 11 percent per year and is projected to be a $2.7 billion industry by 2022,
according to analyst IDC—and K1 is betting on a wide-scope strategy to
capitalize on that market opportunity.
"It’s rare to have the opportunity to combine the two
largest independent companies in such an attractive market, said K1 managing partner Hasan Askari. "We've created the leading global organization
covering the full scope of integrated travel, expense and invoice management
software that is able to serve the broadest range of companies in the market."