Dive Brief:
- Bill Holdings may make acquisitions to help drive growth as it operates under pressure from activist investors that took an ownership stake in the bill payments company last year.
- “We are always evaluating, understanding opportunities to partner and do an M&A,” Bill’s founder and CEO, René Lacerte, said Tuesday at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco. “Nothing to say at this point in time, but I think we are well-capitalized to take advantage of that.”
- Lacerte said he views industry consolidation – including the sales of fintechs Brex, AvidXchange and Melio within the past year – as validation that “bigger players” are entering the business-automation space and will drive further customer adoption of finance software tools for smaller and midsize companies.
Dive Insight:
The recent M&A deals “tells me the category is evolving, it’s maturing, that there's going to be an opportunity for even more customer adoption, because larger players are saying that they’re coming at this,” Lacerte said in response to a question about consolidation.
“We focus on building the best tools and capabilities to be a public, independent company.”
Bill, based in San Jose, California, provides software services to small and midsize companies to help handle payment, invoicing, accounts receivable, spending and expense management and other functions.
The CEO also pointed to Bill’s agreements in September and October with large providers of enterprise resource planning (ERP) and human resource platforms – Paychex, Acumatica and Oracle NetSuite – as a sign of greater awareness and interest in the industry.
“Five years ago, those companies, they would take a call from me but they wouldn’t actually engage,” Lacerte said. “There’s more awareness, people are excited about the space, and that’s actually good for customer adoption.”
Bill management has been navigating the demands of three activist investors over the past six months. Starboard Value, Elliott Investment Management and Barington Capital Group all announced holdings in the company last year.
In an interview last month, Barington Capital CEO James Mitarotonda said that Bill faces “challenges” and should sell itself because it’s not valued sufficiently by the public market. The New York-based hedge fund holds a Bill stake worth about $20 million.
Bill reordered its board with four new directors in October, including two proposed by the New York-based hedge fund Starboard Value.
Bill spokespeople did not respond to a request for additional comment on Lacerte’s M&A remarks.
Like other software players, Lacerte said Bill is focused on achieving the “Rule of 40” financial metric, meaning a goal of having revenue growth plus profit margin be 40% or greater. The metric is viewed as one way for technology companies to more evenly balance their investments for growth with the need to be profitable.
The fintech Block, for example, adopted a Rule of 40 goal at its investor day event in November and said it would achieve the metric in 2026.
“There’s a massive market to go get, so we should be holding ourselves accountable [for] driving more growth,” Lacerte said. “And given our size, we should be holding ourselves accountable [for] driving more profitability,” he said, calling the Rule of 40 “a balance of the two.”
