In our analysis of acquisition processToday we want to focus on the multinational SAP. On 11 November, the German company confirmed its investment to acquire Qualtrics, a developer of business software.
The ERP sector is booming thanks to falling implementation costs, growing functionality, and increasingly stringent regulation, favouring the implementation of ERPs.
SAP and ERP
SAP is one of the world's largest companies in the Enterprise Resource Planning (ERP) sector and is listed on the Frankfurt Stock Exchange and the New York Stock Exchange (NYSE). Its main competitor is Oracle, followed by others such as Microsoft or Sage.
SAP is widely accepted by medium and large enterprises because of its ability to customise without limits, thanks to the implementation of ERP systems that allows consultants to optimise the functions for each customer tailoring the product to your needs.
ERPs are integrated computer programmes that optimise and monitor the company's different supply, production, sales and logistics processes, among others. This streamlines processes, avoiding duplicate invoices and facilitating the monitoring of the correct functioning of the company in a simple way.
These programmes are used by companies such as public administrations, but due to the cost of licensing and implementation, they are normally used by medium to large companies.
The ERP industry is growing at a rapid pace, thanks to the increasing digitisation of processes and regulatory requirementsThe use of ERP is almost a necessity in certain sectors.
SAP currently has a market capitalisation of around €115bn and believes it can reach €250bn in the next few years if the industry continues to grow and if the company itself continues to grow inorganically.
SAP acquires Qualtrics
On 11 November last year, SAP decided to buy the company Qualtrics before the IPO. The purchase of Qualtrics' 100% has closed for €8bn in cash, well above the €4.5bn valuation had it gone public.
Qualtrics is a company dedicated to the creation of software for the development of surveys, market research applications and feedback development.
SAP's acquisition of Qualtrics was motivated by the following factors:
- el expertise The company's role in the development of real-time information analysis.
- the analytical capacity of large amounts of data in real time.
- the ability to grant a instant feedback.
The deal's multiple is 20x this year's expected sales, a very high multiple that is underpinned by SAP's strategy to enter the digital cloud business and to start offering customer experience services to its existing customer base.