Case study: Union Square
The sale of British firm Union Square to US player Deltek shows how the increasingly complex demands of project management are driving M&A in the AEC software market.
If you want a view on the huge challenges of running a construction project just ask Richard Vincent, co-founder of UK knowledge management software company Union Square.
“On a typical construction project you can have upwards of 30 different companies all working on the same building. So that’s 30 different organisations trying to deal with information at the same time. That means an awful lot of data needs to be managed and tracked properly.”
In the past it was precisely these challenges of managing such complex projects that all too often bedevilled large construction projects with cost and time over-runs. But it was also one of the reasons why Union Square was established back in 2000.
As Vincent adds: “Before setting up Union Square I and the co-founders all used to work for an accountancy software supplier to the construction industry and CEOs used to come up to us and complain that they could never get all the information they wanted at their fingertips. That gave us the idea for the business.”
At the time he says the concept of bringing all of a company’s knowledge, data and drawings together through one browser was completely unheard of. “We were still in the very early days of the internet and email. But as the amounts of data being handled multiplied across many departments, and the market became ever more regulated, the need for AEC companies to adopt software like ours which could manage whole projects became far more pressing.”
For many years Union Square stuck to the fast-growing UK market, but a few years ago began expanding into English-speaking markets overseas such as Australia and into countries where English is widely spoken such as Scandinavia.
As Vincent adds: “North America was the next most obvious stop for us, and in many ways was always the endgame for the business. Most of our competition was actually coming from the US and we knew we needed to be over there because it is such a massive market.”
The company started investigating a partnership with a US firm and in summer 2016, advised by Clearwater International, Union Square was sold to Deltek, a global provider of enterprise software and information solutions for project-based businesses with more than 20,000 customers globally.
The deal allows both businesses to grow their global footprint and leverage their complementary client bases. “Deltek’s presence and significant customer portfolio in the US represents a huge opportunity for the cross-selling of Union Square’s software,” says Vincent.
Deltek CEO Mike Corkery says as Deltek continued to expand its presence globally, Union Square became a natural fit to accelerate its growth strategy. “The attraction of the company for us was its whole approach to project information management and the whole process of managing drawings, documents, emails and artefacts in one system. These are capabilities that align well with our portfolio of solutions that power the project lifecycle.”
Corkery says there has been a huge amount of technological disruption around the AEC industry in recent years. “There are more and more tools available around project execution and front office activities. The very fact that project management has become so much more challenging drives the need for creative solutions, and there is a lot of pressure on those delivering projects to deliver real value while being as efficient as possible. Managing data and collaborating on information to make smart decisions is critical for successful companies, especially in the AEC industry.”
Vincent says despite the availability of increasingly advanced software solutions, keeping information up to date on AEC projects remains challenging. “I think people are struggling with some of the complexities of a BIM-driven world. Another big issue is that projects rely on good wi-fi networks to manage data and this is not always possible if you are working in more remote locations. There are also still security issues in sectors such as defence when it comes to managing data.”
However, Corkery says the cloud has a massive role to play in the future. “We will take Union Square’s applications into the cloud which was on its roadmap and which we will now accelerate. Customers are looking to access the powerful capabilities that these applications can provide without taking on the IT burden. Every part of our business has a cloud component to it.”