November 12, 2013

Oracle Acquires Big Machines

A few weeks ago, Oracle announced the acquisition of Big Machines, a leading provider of sales automation technology. The investors in Big Machines included JMI Equity and Vista Equity Partners. Interestingly enough, Salesforce was also a small investor in the business given the tightly integrated technology between the two parties.

The deal is rumored to have been struck at approximately $400 million, representing 5x revenue. While this is a hefty price to pay, it provides Oracle significant benefit. First, it gives Oracle a robust cloud-based Configure, Price, Quote (CPQ) solution allowing salespeople to be more efficient and maximize revenue opportunities. Secondly, it provides Oracle access to a large number of Salesforce customers – more than half of Big Machines clients are Salesforce customers. In a nut shell, acquiring Big Machines is just another step enabling Oracle to go head to head with Salesforce. This deal comes on the heals of Oracle’s acquisitions of Eloqua (which also gave it access to hundreds of Salesforce customers), RightNow and Taleo, all big name cloud software companies serving varying functional areas.

We expect continued acquisition activity of niche software vendors serving the sales and marketing departments of large organizations. In addition to cloud software, we believe service providers and content providers serving the sales and marketing functional areas will also continue to be in focus by acquirers, albeit likely from a different set of buyers rather than Oracle, SAP, IBM and Salesforce.