by Jim Lundy
This week PactSafe announced that it was being acquired by San Francisco based Ironclad, which was fresh off of its $100 Million funding round and had money to burn. Terms of the deal were not announced, but Aragon estimates that it was close to $40 Million. This blog analyzes some of the reasons for the deal.
Why Did PactSafe Sell Out to Ironclad?
The easiest way to explain why the two firms merged is simple. The market for content automation is growing and has some large competitors. The market for clickwrap transaction platforms is young, but it has already attracted at least one large provider—DocuSign.
So it makes sense that two smaller providers combine forces—and that is what Ironclad and PactSafe just did. There are strong synergies between the two firms. The market opportunity for CTP is actually larger than Ironclad’s focus on contract life cycle management.
Is an IPO in the Future for Ironclad?
While PactSafe could’ve gone ahead on its own, it faced significant requirements to raise lots of capital. That said, we expect that Ironclad may need another large E round to get to an IPO, unless it goes the SPAC route. Note that the SEC is looking carefully at SPACs so that window could be closing.
Ironclad’s purchase of PactSafe positions it well for the DTM market.
The Market Opportunity for Clickwrap
There is a significant and growing market opportunity for clickwrap transaction platforms.
Give it a few years, it’s a no brainer that any number of enterprise processes need terms and conditions; business leaders will need to embrace platforms that let them provide highly accurate terms and conditions along with their transactions.
Bottom Line
Ironclad and PactSafe have a tremendous market opportunity and together they can take on a growing number of competitors. Ironclad has made headway with its contract management software, particularly in the legal space. The purchase of PactSafe’s secure platform will position them effectively in the market.