http://leapcomp.com/2009/02/exclusive-interview-with-christopher-cabrera-of-xactly-on-centive-acquisition.html

Thanks for sharing. I’m not sure that ANYONE will have to re-implement. I’m just speculating that it could be a possibility, or at the very least, a concern. I’m hoping that there will be a way to do the migration from one platform to the other, or from both platforms to a new platform happen seamlessly.

I’m not sure which press-release you have read this from, but the one I’m linking to from my post says “Xactly will fully support both companies’ product platforms for a minimum of 18 months to ensure the seamless transition of customers to a unified product roadmap.”

18 months is really just a number that Xactly mentioned for the moment. If in 18 months they are not ready to migrate people to the “unified roadmap”, there is nothing stopping them from extending that deadline… or even to keep supporting one of the platform as a “legacy platform”, while developing the other one and trying to convince customers to migrate to the new one.

As you said, only time will tell…

Maybe I am reading to much into the wording but it said “whether you are already in production or in the process of implementing Xactly Incent. Xactly will continue to support the Xactly platform for a minimum of 18 months”. That comment says support of the Xactly platform for a minimum of 18 months. It did not say the Centive platform.

My assumption when I read this is that the Centive platform would be the go-forward platform that they would build from. I assumed one reason is due to the fact that Xactly’s issues with the effective dating they added in last year. Effective dating is crucial in this type of application and Centive’s platform was built with effective dating from the ground up, so it works throughout the application, whereas Xactly only has it in certain areas. Also, Xactly’s platform requires 3rd parties for reporting and Centive built an all integrated reporting application. Integrated can save on overall costs if it works well and I am not sure if it does.

These assumptions could be totally wrong and only time will tell. Hopefully, Xactly will fight the company politics that happen in these types of mergers and actually take the best of both applications and make a killer app. We really need it for this space to continue to grow.

1. It could be… but I think that it will leave the door open for new solutions to establish themselves as a viable competitor to Xactly/Centive.

2. First, I don’t think that no one pays Centive $2M. Centive was an on-demand application, and as such, their pricing model is on a number of payees per month. Sure there is an implementation cost, but I believe that that cost would be much smaller than that (by an order of magnitude or 2 depend on the size of the implementation).

Also, I doubt that Xactly will leave Centive current clients hanging. After all, they need their recurring revenue and as I pointed out, that’s one of the main reason why I believe they bought Centive. I’m sure that Centive clients, especially those that just went live recently are annoyed by this, but I’m sure that Xactly will figure out a way to migrate them to a combined platform next year, or in the worst case, to re-implement them for a nominal fee (and potentially for free if they really value that particular relationship?).

3. Agreed, and I have no idea. Xactly is a private company and those details are not available.

4. Not knowing what the debt ratio is or what the 30M was used for, it’s hard to say. My point is that when a company raises a lot of VC money, the goal is usually rapid growth. Assuming that this growth (more customers and better products) results in a better valuation for the company, it would take a “richer” company to acquire it.

5. As per the press release, it was a stock transaction and details were not disclosed. Without knowing more details, I wouldn’t even want to try to speculate on how much Xactly paid for Centive.

1. Is this a sign of the contracting SaaS/EIM market? I thinks so.

2. I mentioned in a previous comment (Vendor Selection perhaps) that determing a vendors long term prospects would be key BEFORE moving forward otherwise you find yourself up the proverbail creek. Imagine the Centive clients that just spent $2M overall and went to prod this month. In 6 quarters there will be NO more support or upgrade options (save replatforming again….) for their system. Not ideal.

3. The article says Xactly secured 30M in financing back in April 2008. How much of that was equity and how much was the facility? I ask because credit has been slashed across the board, so if it was heavily weighted towards the facility (25/5) that 30M could be significantly less today.

4. You say the equity offering/facility would make Xactly hard to acquire? How so? If I wanted to acquire Xactly I would value the equity at par/premium or discount and then assume the debt, I don’t pay for debt. In theory the higher the debt ratio (credit facility used) the lower I pay per share of equity, especially with diminishing prospects and a bleack economic picture.

4. How much did they pay for Centiv? CALD has a market cap of 83M and there public with a broader client base. I can’t imagine the trx was valued at any more than $10M.

kt