by Jim Lundy
On the heels of its SpringCM acquisition, DocuSign announced on February 27th, 2020 it was buying content analytics provider Seal Software. The two companies already have a history; DocuSign partnered with Seal 2 years ago. But today’s deal is a full buyout. This blog analyzes key aspects of the deal.
Who Is Seal Software?
Seal Software is a San Francisco-based company focused on document and contract analytics. Seal has been gaining traction in this market—one that Aragon identified in 2017. Seal had raised $58 Million, but in 2019, it saw a series of departures—its founder and CEO Ulf Zetterberg who was pushed up to chairman, raising questions about whether investors had become impatient with Seal’s growth.
Seal is a content analytics company offering a technology designed to automate and streamline the process of reviewing legal contracts. It makes use of artificial intelligence to make legal documents more easy to search and understand. Specifically, Seal’s AI offering can analyze and score contracts, making it possible for stakeholders to speed up their decision-making process and search the contract for information that is most pertinent to their needs. In the legal world, offerings like Seal’s are becoming more widely adopted. Firms can stand to lose up to 40% of value in a given deal because of inefficient contracting, a serious loss that is causing many to turn to AI for solutions.
DocuSign Buys Seal Software: The Numbers
Aragon estimates that Seal had revenues of just under $20 million. At $180 Million, DocuSign again paid a large multiple—9x revenues for Seal. This is eerily similar to the large price it paid for SpringCM two years ago. DocuSign certainly has no problem doing this deal, but to us it seems it is paying large multiples when it doesn’t have to. Seal had taken investment of around $58 Million—so investors will make money on this deal.
The Demand for Content Analytics Is Growing
The demand for AI in digital transaction management and workflow and content automation is here and it goes beyond the legal market that Seal Software has been targeting. There are a host of other vendors who compete here as well. Last year, Aragon identified IBM, Kira, and ABBYY as serious competitors for Seal’s market. Companies like Microsoft and Google are also contending for the same slice of the pie, though they have the resources to target a larger part of the document and contract analytics than Seal (check out Aragon’s free research note to learn more about this market).
Content analytics applies business intelligence and business analytics to digital content in order to optimize content creation. Many of today’s content analytics offerings leverage artificial intelligence to promise improvements in content ROI, performance, and general quality. While they have been a mainstay of the marketing world for some time, content analytics technologies are becoming a bigger and bigger part of the content workflow throughout the enterprise.
Bottom Line
In the recent Aragon Globe for Digital Transaction Management, we predicted that workflow and content automation, alongside content analytics, would represent the advanced era of digital transaction management. Today’s sale suggests our prediction is correct; as companies recognize the value of efficiently processing digital contracts, the ability to analyze the content of those contracts will become more and more vital.
Clearly, content analytics is a hot market. For companies who are already in the digital transaction management market, it will likely pay to adopt content analytics tools that are driven by artificial intelligence. From this perspective, DocuSign may be making a valuable investment by upping its content analytics game. There is no doubt Seal will benefit greatly from this deal. It remains to be seen if DocuSign’s acquisition will be worth the hefty price tag.