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DocuSign To Acquire Seal Software For Contract AI Tech

Mar. 02, 2020 3:14 PM ETDocuSign, Inc. (DOCU)IBM, TRI, WIT, WOLTF, WTKWY, TRI:CA5 Comments


  • DocuSign said it will acquire Seal Software for $188 million in cash.
  • Seal has developed legal contract machine learning technologies that improve contract review efficiencies within enterprises.
  • With the deal, DOCU is bringing an investee company in-house to more widely apply its 'AI' technologies across its offerings.
  • However, DOCU the stock appears richly valued given the firm's continued operating losses, so my bias is NEUTRAL.
  • Looking for more stock ideas like this one? Get them exclusively at IPO Edge. Get started today »

Quick Take

DocuSign (NASDAQ:DOCU) has announced the proposed acquisition of Seal Software for $188 million.

Seal has developed a machine learning-based contract analytics software system for enterprises of all sizes.

With the deal, DOCU brings in-house technologies it can apply throughout its offerings, increasing value for clients.

However, DOCU still hasn’t reached operating breakeven, so my bias for the stock is NEUTRAL until it makes a decisive turn in that direction.

Target Company

Walnut Creek, California-based Seal was founded to develop contract discovery and lifecycle management software solutions for businesses.

Management is headed by Chief Executive Officer John O'Melia, who has been with the firm since March of 2017 and was previously SVP Worldwide Services & Customer Success at Dell EMC.

Below is an overview video of Seal's solution:

Source: Seal Software

Seal’s primary offerings include:

  • Contract discovery

  • Data extraction

  • Analytics

  • Marketplace

The company has developed robust alliance and technology partner programs.

Investors have invested at least $58 million and include DocuSign, Toba Capital, and Tern.

Market & Competition

According to a 2017 market research report by MarketsandMarkets, the market for legal analytics was $451 million in 2017 and is expected to grow sharply to $1.86 billion by 2022.

This represents a forecast CAGR (Compound Annual Growth Rate) of 32.7% from 2018 to 2022.

The main drivers for this expected growth are the increasing use of machine learning technologies to improve service offerings and a desire by enterprises for greater efficiencies in risk management and procurement analytics.

Major vendors that provide competitive services include:

  • Wolters Kluwer (OTCPK:WOLTF)

  • Thomson Reuters (TRI)

  • MindCrest

  • UnitedLex

  • Argopoint

  • LexisNexis

  • Premonition

  • Analytics Consulting

  • IBM (IBM)

  • Wipro (WIT)

  • Other small firms

Source: Research Report

Acquisition Terms & Financials

DocuSign disclosed the acquisition price and terms as $188 million in cash.

Management did not provide a

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This article was written by

Donovan Jones profile picture

Donovan Jones is an IPO research specialist with 15 years of experience identifying opportunities for IPOs. He focuses on high-growth technology, consumer, and life science companies.

He leads the investing group IPO Edge which offers: actionable information on growth stocks through first look S-1 filings, previews on upcoming IPOs, an IPO calendar for tracking what’s on the horizon, a database of U.S. IPOs, and a guide to IPO investing to walk you through the the entire IPO lifecycle - from filing to listing to quiet period and lockup expiration dates. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (5)

Alfred Einstein profile picture
I intended to buy some shares in this company in the mid $60s last year and never did unfortunately. I would love to establish a position at some point in the near future, just struggling with where to pull the trigger.
I just bought a house. It's scary that everything was signed using this company. Even the final title didn't require a proper notery seal.
In most states, the #1 requirement for being a notary is no felony convictions. Considering that low bar, I think your concerns are a little much.
Sorry, meant a bank medallion seal.
Chris Lau profile picture
$DOCU did very well for our subscribers last year. Got in after that dip. Agree that the stock is a hold/neutral today.
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