• Revel is latest startup to consider sale as funding wanes
  • Point-of-sale company last valued over $500 million last year

In a bid to grow its retail sector reach, International Business Machines Corp. is in discussions to acquire Revel Systems Inc., people familiar with the talks said.

Conversations are still at an early stage and may first involve trials of Revel’s iPad-based point-of-sale system, which are expected later this year, the people said. Revel and IBM declined to comment.

Revel could help fill a void in IBM’s retail services product line. IBM sold its point-of-sale terminal business to Toshiba Tec Corp. for more than $800 million in 2012. Revel is the latest startup to consider a sale amid a tighter funding environment and dropping valuations.

Technology acquisitions reached $295 billion in the first half of 2016, the second-highest ever, according to research firm Dealogic. While mega-deals, including Microsoft Corp.’s acquisition of LinkedIn Corp., captured most attention, companies valued at $500 million or less represented 69 percent of total deal volume during the second quarter of 2016, according to PricewaterhouseCoopers LLP.

Restaurants and retailers, including Cinnabon, Tully’s and Goodwill Industries, pay to subscribe to Revel’s software service. It handles point-of-sale functions like order entry, cash register and payment processing. The software also helps manage employee scheduling, payroll, inventory and accounting. Some functions are provided via integration with third parties including Intuit and Expensify.

Intuit, venture firm DCM, Roth Capital Partners and Welsh, Carson, Anderson & Stowe have invested in Revel.

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