There are many different reasons that businesses acquire businesses, but Appian (NASDAQ: APPN) CEO Matt Calkins says his company is making acquisitions for the technology.
In this segment of “Beat & Raise, ” recorded on October 8Fool contributors Jeremy Bowman and Nicholas Rossolillo discuss this acquisition strategy and why it could give the company a long-term advantage.
Jérémy Bowman: On that note, the retention figure of 99%, in fact I asked Matt why he thought it wasn’t, his response was quite simply that our technology is just top of the line. He thinks they have the best product on the market, and I think the retention figure backs that up. CEOs are a little different. I think Matt is a technologist at heart, and he’s in it. I think that’s what excites him. We were talking about the Lana Labs acquisition too, and he said, “We don’t buy to impress the market or to supplement our numbers, that kind of thing.” He said to me, “We bought them for the technology.” That makes a lot of sense, and I get the impression that you don’t really hear that rationale, at least in the media when it comes to acquisitions. There is usually more of the business case, but it’s a smart decision to buy it for the underlying technology.
Nick Rossolillo: Yes. Absoutely. Some CEOs can brag about their reasons for making such and such an acquisition. On that front, at least, Appian has been pretty conservative. The two acquisitions they made, the purchase of RPA, the purchase of Software Box last year, was a very, very small, very small business. Lana Labs is like that too. Usually, when the headline says Appian has made this acquisition, the terms are not disclosed. We’re talking pretty small acquisitions, maybe a few million dollars, a few tens of millions of dollars at most, when it comes to undisclosed terms like that. The company can afford to do it. Go get some neat tech that will easily fit into the platform they’ve already built.
Archer: Yes, it helps make these future targeted acquisitions quite transparent.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
Comments are closed.