Mike Kaul is a really good friend of mine, and also the CEO at diCarta (Valentine poached him from one of my companies a few years back, but it really was a great move for Mike). This merger is actually a good case study in how to push through the "tweener stage" that enterprise software companies enter when they approach $30 million in annual revenue.

There is no doubt much debate about how expansive this stage is, but in my book it starts at $30m and ends somwhere around $70m. It is here that companies experience a range of new challenges associated with their size and the requirement to invest heavily in infrastructure not only to support current growth but to get the foundation right to support what is next. This investment causes some turbulence to the P&L and creates a scenario where they become much less attractive as an acquisition candidate, and in this environment forget about going public.

In the case of Emptoris and diCarta, merging is a smart strategy, assuming the integration is smooth, because it pushes both companies well past the tweener stage and sets them up to be a much more significant company than just the sum of the parts.

Congratulations to Mike and his team as well, when he took the reins of this deal he had to make some tough decisions, recap the company, deal with a demanding investor syndicate, and keep the customers happy as well. His team pulled it off, ultimately delivering great growth in a tough environment and fundamentally shifting the company to a solid license revenue base (yes, it is easy to forget that a great many companies do indeed sell licenses of their apps and not subscriptions).

Emptoris and diCarta Merged diCarta, the leading provider of Enterprise Contract Management software, and Emptoris, the leading provider of Enterprise Supply Management solutions, are pleased to announce the completion of a merger. This is very exciting news for diCarta customers and prospects.