This blog was last updated on December 6, 2024
Like many of you, I read the news that Vertex had officially moved forward with plans to acquire Pagero with interest. This hardly comes as a surprise. These two companies already had a commercial relationship and since their October public announcement of a strategic partnership, a number of industry insiders and pundits predicted this would be the logical conclusion. It became a question of when, not if, they would make this move. The relevant question is, what does this mean?
When they announced their partnership, the stated purpose was “to provide multinational companies with an end-to-end solution to automate business transactions and manage indirect tax, reporting, and e-invoicing compliance globally.” To which I said, “Good! It’s about time!”
I feel this way because it’s another material solution provider taking a small step forward in the right direction. They have acknowledged what Sovos has known and has been delivering to the industry for years. They have realized that our industry is in the full-fledged shift from “point solutions to platforms.” That the customers who buy our solutions no longer want to live in a world where they must invest in people, process, and system integrations across multiple not-at-scale, non-integrated, regional technology solutions that are different by use case, line of business, and country. They are taking their first step on a journey that Sovos has been on for eight years.
The catch-up game begins
Sovos recognized the need for this technology almost a decade ago and has been strategically acquiring and building a best-in-class solution that is unique in the industry. We realized that there was a near term future as the world becomes more and more digital, cross-border and regulated. Where the CFO and CIO have come to the realization that they need one holistic system of record – a platform – for their tax and compliance needs. Not just one enabling software platform, but a compliance data system of record.
It no longer made sense to have disparate providers across countries and across their direct and indirect tax, compliance, global VAT, digital ID and trust, regulatory technologies, e-inventory, CTC, data and analytics, and compliance needs. We understand better than anyone the aspirations that drove Vertex to acquire Pagero. We were early to identify the now urgent market need and invested billions in acquisitions and hundreds of millions of dollars to integrate and build that complete global compliance system of record to meet these needs. Sovos powers half the Fortune 500 and tens of thousands of other businesses, processing over six billion compliant transactions each year. Businesses that came to the same conclusion and have been on the journey with us – they realized this end-to-end automated platform solution is an imperative, not a nice to have.
What Vertex just did is a step in this direction. While combining a tax determination point solution and an e-invoicing point solution is by no means the entire package, it’s directionally correct. Now the fun part for them begins! This stuff is hard, and they’ve committed to a massively superior level of profitability from the combined entity to their public shareholders, so they’ll have to thread the needle between tremendous cost cuts and investing in basic integration…while somehow also investing in their solutions and their customers. This is hard stuff. We’ve been through it. I wish them luck.
In many ways, I take this news as a compliment – they say “imitation is the sincerest form of flattery.” As we stand here today, Sovos is the only global, end-to-end compliance provider capable of solving the world’s most complex regulatory issues. The fact that worthy peers in the space are now taking their first steps toward building what we have built reinforces that Sovos – and our customers – have been doing the right thing the last eight years, and more importantly, will be relied upon to do so for the next eight.
The opportunity presented with Vertex acquiring Pagero
At Sovos, I am glad to see the industry maturing. It’s good for everyone as we are enabling the future. We are excited that we continue to offer any company the solution they need to navigate the most complex regulatory environments across any industry or region. And to do so with true confidence that they are supported by the best technology and regulatory expertise in the business. Welcome to the game!
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