Corcentric, a provider of procurement and financial process automation software, is considering raising private capital to fuel organic growth and acquisitions, said president and CEO Matt Clark.

The Cherry Hill, New Jersey-based company is more open now to considering a majority investor than it was in 2020 when it took its first outside money, Clark said. Corcentric raised USD 80m in a minority investment from Bregal Sagemount, whose investment horizon is coming up in May 2025, he added.

As it enters a new stage of its acquisition strategy, the company aims to focus more on opportunistic tuck-in buys after having finished filling gaps in its business-to-business (B2B) payments offering with the acquisition of Vendorin in 2021, Clark said. Corcentric has procurement, accounts payable and accounts receivable solutions, presenting many opportunities for acquisitions and cross-selling, he added.

The company is mostly considering targets with USD 5m to USD 15m in revenue, Clark said, noting it does look at bigger opportunities.

From a payments perspective, interesting targets include companies with businesses focused on cross-border payments and supply chain financing as well as payment modality like real-time payments capabilities, the CEO said.

Asked about cross-border payments company Veem, which has tapped Raymond James to pursue a strategic review, Clark said it “absolutely” is a business that would fit within Corcentric’s acquisition strategy. Today, Corcentric performs cross-border payments through partnerships, he said.

“We’ve done some work on that business. I don’t know if our [corporate development] folks have had direct interaction, but it’s not a new name for me,” Clark said. “[It’s] on our radar for sure.”

Corcentric is also interested in targets in the pure software bucket, mostly artificial intelligence tools that could add value for customers and make its managed services professionals more efficient, Clark said.

He called the current M&A landscape in B2B payments “a buyer’s market” but noted an increased involvement from private equity that is driving fresh competitive tension in the space. Down from 2H21 peaks for pure-play payments companies, multiples are around 6x-8x revenue and up to 20x EBITDA, Clark said.

While it has not acquired in several years, Corcentric expects to execute a buy in the near term, Clark said, attributing the gap to the integration effort with Vendorin as well as an attempted merger with a special purpose acquisition company announced in 2021.

Public debut not a priority

A public debut for the company, which has tried to list twice before, is not a priority, said Clark, who took over as CEO in July 2023. Founder Douglas Clark remains executive chair of the board, and the Clark family remains the company’s largest shareholder.

In 2015, Corcentric considered going public through an initial public offering on the Nasdaq, but it shelved that plan in 2016 due to poor market conditions. In 2022, Corcentric and blank check company North Mountain mutually agreed to terminate a merger that valued the company at USD 1.2bn.

Clark described the SPAC merger as opportunistic, noting that as market conditions started to get “wobbly,” Corcentric was uninterested in pursuing the effort because it didn’t need the capital. Corcentric’s third-party private valuation today is less than USD 1.2bn, he added.

A public debut is a more likely path when the company reaches USD 250m to USD 300m in revenue, Clark said.

It generated USD 163m in revenue in 2023 and has an organic growth three-year CAGR of 10%, according to the CEO. It has averaged around 30% EBITDA margins over time and has been profitable every year since its inception in 1998, he added.

Comps include Corpay [NYSE:CPAY] (formerly Fleetcor) and WEX [NYSE:WEX] for business payments, and Thoma Bravo-owned Bottomline Technologies (taken private in 2022 for USD 2.6bn) and Thoma Bravo-owned Coupa Software (taken private in 2023 for USD 8bn) for software. EQT-owned Billtrust (taken private for USD 1.7bn in 2022) is the main comp for accounts receivable, Clark said.

Competitors include banks’ payments solutions and nonbank players like AvidXchange [NASDAQ:AVDX] for accounts payable as well as companies like Billtrust and HighRadius on accounts receivables, he said. For pure software, it competes with companies like Accel-KKR-owned Basware, Coupa and Bottomline Technologies, he added.

Global expansion strategy

The company will consider global acquisition targets, said Clark, who also noted it would not enter new markets organically because an acquisition would jumpstart growth.

About 80% of its revenue comes from North America, with the remainder coming from Europe, primarily France and the UK, the CEO said. Many of the businesses headquartered in North America are delivering Corcentric’s solutions globally, he added.

Corcentric, which has about 575 employees, pairs its software with expert advisory and managed services to help businesses better manage commerce solutions like source-to-pay, order-to-cash and fleet management.

It was founded as AmeriQuest to provide small to mid-sized businesses in trucking and logistics with transaction management software for group purchasing organizations. Transportation remains Corcentric’s strongest industry, though it has diversified and counts among its largest industries served manufacturing, retail and, via a recent strategic partnership, healthcare, Clark said.

The company has in-house general counsel and most frequently works with Kirkland & Ellis and DLA Piper. BDO performs its audit.