Madison Dearborn has bought itself what many (including me, as an industry observer) consider one of the top two VMS platforms in the market. With Fieldglass, they’ve purchased more than technology and a high-margin, high-growth business — they’ve also acquired a highly skilled and close-knit team that I’m guessing, knowing some of the personalities involved, are in it for the long haul (when GTCR acquired IQNavigator, there was material management turnover). Yet the multiple of the deal, despite the strength of the asset involved, suggests that both Fieldglass and the broader VMS sector are outliers from the general procurement and SaaS software market from an adoption, growth and go-to-market perspective. There is no way (given the common valuation multiples of providers in this sector, not to mention common SaaS multiples in general) that this could be a common tech play in terms of underlying financial modeling and customer growth assumptions.
But rather than attempt to hit on every relevant point, I’ll offer a number of loosely coupled observations below. I think this commentary will help those who don’t follow this space every day to understand some of the key drivers in this market (including customers who are looking to get more from their VMS and services procurement solutions).
Let’s first start with a few observations and backdrop: