Perfect Commerce Sees Value In PurchasePro

LAS VEGAS— With a special U.S. Trustee ready to sign off on Perfect Commerce’s acquisition of PurchasePro.com as of presstime, it may be time for the soon-to-be new owners’ accountants and internal auditors to more closely assess precisely what $2.15 million buys these days. While a spokeswoman for Palo Alto, CA-based Perfect Commerce affirmed the transaction was scheduled to close Jan. 17, which is pushed back from its earlier Jan. 8 closing date, competitors in the third-party purchasing ranks have been monitoring the PuchasePro situation from bankruptcy to buy-up. To this end, observations indicate Perfect Commerce President/CEO James McCormick and his administrative associates may have a bit of explaining to do to the company’s board and backers. In line with earlier accounts of the PurchasePro deal, one of the contentions was that the e-procurement operation had at one time been valued at some $3.2 billion— a valuation several major competitors find to be entirely out of hand, strongly doubting PurchasePro could ever have been in position to conduct enough business, hospitality and otherwise, to justify anywhere near this dollar assessment. Indeed, promotional information on Perfect Commerce’s website seems to raise questions regarding the worth and price paid for the assets and business of this on-line procurement specialist. Specifically, the website states: “AMR Research projects the strategic sourcing market will grow from $350 million [in 2001]to $1.8 billion [in 2006]… driven by maturing software and growing awareness of the compelling ROI.” Apparently, the major bone of contention raised by competitors regarding PurchasePro’s reputed worth involves the Las Vegas-based business’ modus operandi. “Customers in general are just not ready to transact business and do their purchasing on-line to any great extent at this time,” said Doug Fiedler, vp/program development & marketing for Rockville, MD-based Avendra LLC, arguably the largest of all third-party procurement operations. Avendra offers similar capabilities regarding on-line accessibility and activity, but finds “more than 98% of [the company’s]business is still being transacted in a traditional manner,” according to Fiedler. As such, it is not surprising that the prevailing notion throughout Fiedler’s organization is “the whole on-line purchasing arena is very much up for grabs.” Echoing this sentiment was R.C. Patel, chairman of Atlanta, GA-based VproLogic, who said his organization recognizes an adherence to traditional procurement-purchasing practices as well. “Our clients basically still do things the old-fashioned way. It’s what I call the RC factor— resistance to change— and it’s up to us to help gradually migrate them to an on-line mindset,” he said. Among other obstacles cited by Patel as helping to lead to PurchasePro’s eventual bankruptcy filing was his estimation that “their business model was just not right.” This realization, as much as any other market factor, prompted PurchasePro’s stock price to plummet “from about $130 per share to maybe 50 cents or thereabouts,” he said. In addition to suggesting PurchasePro’s “original valuation was little more than hypothetical,” Patel said other problems he was aware of included claims of technology and system infringement. Accordingly, far from thinking of the eventual $2.15 million winning bid as representing any spectacular bargain, PurchasePro may actually have been “lucky to find a buyer at all,” Patel said. Actually, maybe there was not quite as much luck involved in this disposition as one might think. After all, Patel did admit he believed the financially beleaguered firm utilized “bona fide software” to service its client base. However, he also said it was believed that some of this client base represented little more than “bought business,” with a number of the biggest names allegedly paying little or no cost for their participation. And, in lodging and hospitality terms, there certain