Prophix Acquires Sigma Conso

Craig Schiff , President and CEO, BPM Partners

Overview

Prophix, a leading North American  budgeting and planning CPM vendor focused on the midmarket, has announced its acquisition of Sigma Conso, a European CPM vendor focused on consolidation and close. While most CPM (performance management) projects are driven by the need for budgeting and planning, demand has been steadily rising for robust financial consolidation and close capabilities. In the midmarket in particular the options for a complete CPM solution that includes budgeting, planning, reporting and true consolidation have been somewhat limited. Consolidation is one of those things that every vendor claims to do, but most only offer a very basic version of the necessary functionality.

Details

The acquisition will bring Prophix several hundred new customers, offices throughout Europe and Asia, and a consolidation suite that includes consolidation and reporting, intercompany reconciliation software,  an IFRS16 (lease accounting) module, and a disclosure management platform powered by Iris Carbon. Equally important is the addition of Sigma Conso’s expert staff to the Prophix team. There will be no job losses related to this acquisition. Although not publicly disclosed, it has been speculated that Prophix paid US$100 million plus for Sigma Conso.

Our Assessment

We believe this is a big win for all concerned, with limited downside.

Prophix and its customers:

• Prophix becomes a global enterprise with a comprehensive and competitive CPM suite for the midmarket/upper midmarket, and the ability to pursue deals that may not have been a possibility in the past
• Prophix will have the opportunity to upsell their budgeting and planning solution to Sigma Conso customers
• Prophix customers gain access to a consolidation solution that can handle more complexity and larger use cases than their current Prophix consolidation solution

Sigma Conso and its customers:

• Sigma Conso and its staff become part of a larger organization and will see their flagship product expand into the North American market
• Sigma Conso customers will now be part of a larger global user community and also  see additional investment and support for their consolidation products
• Sigma Conso customers will have the option to take advantage of Prophix’s budgeting and planning solution

Midmarket/Upper Midmarket Buyers of Performance Management solutions:

• Prophix will become another viable option for those looking for robust consolidation coupled with company-wide planning

The (limited) downside:

• It will take a while to integrate the products and we don’t expect to see data integration until some time in Q1 2022
• Sigma Conso currently sells a budgeting and planning solution (“powered by” Unit4 FP&A) and there will need to be a well thought out plan to manage customers of this product and their expectations, and of course eventually entice them to move to the equivalent Prophix solution
• Prophix has never done an acquisition before and we all know there will be many challenges both expected and unexpected, hopefully since the companies appear to have similar cultures and are both customer centric this will go more smoothly than some mergers I personally have been part of in the past

The  Updated Vendor Landscape for Midmarket Budgeting, Planning, Reporting and  Robust Consolidation Solutions

Midmarket/Upper Midmarket Focused:

• Prophix – a new competitor in this segment with the addition of Sigma Conso’s consolidation capabilities
• Fluence – combines enterprise class functionality with ease of use and is integrated with Vena for budgeting and planning
• Planful – the former Host Analytics has always had a very capable midmarket consolidation solution coupled with easy to use planning

There are also solutions targeting the larger company market that have seen success in the midmarket: OneStream Software and Wolters Kluwer’s CCH Tagetik are two of the best.

The performance management market continues to grow and evolve. We’ll continue to stay on top of it and keep you informed with everything you need to know for your own project. If you would like to discuss midmarket planning and consolidation solutions, or anything else performance management related, you can reach us here.

Further Reading: Fluence Acquires XLCubed, Hg Acquires Majority Stake in Prophix, 10 Key Requirements for Next Level Financial Consolidation, Leveraging Financial Consolidation to Manage Through Uncertainty