M&A analysis

The consolidation trend within the AEC software market looks set to continue as both construction software specialists and generalist heavyweights aim to boost market share.

The rise of cloud computing, an increasing desire to access information on mobile devices, and the growth of the BIM market is creating new demand for innovative technology solutions across the sector.

As such many providers are using M&A to fill in gaps in their portfolio to enable them to capitalise on the growing market opportunity.

Key consolidators within the AEC space have included Bentley and Trimble which have both made 12 acquisitions since 2011. Autodesk and Viewpoint have also been highly active with six buys each, whilst other serial buyers include RIB, JDM and Addnode.

Key transactions

2016 saw a number of significant transactions which look set to reshapethe AEC software landscape.

Following Oracle’s acquisition of Textura, it aims to integrate Textura with its Primavera solution to form the Oracle Engineering and Construction Global Business Unit, providing a comprehensive solution to manage all phases of engineering and construction projects.

Other notable transactions have included Roper Technologies’ €2.6bn acquisition of Deltek in December from private equity firm Thoma Bravo. Deltek provides software and information solutions for project-based businesses including contractors, and earlier in the year acquired UK-based AEC software business Union Square Software, a deal which Clearwater International advised on.

Roper, a diversified technology investor, also recently invested €714m in acquiring ConstructConnect, a SaaS provider of data, collaboration and workflow automation solutions which it will combine with On Center, its existing asset in the space.

Recent strategic transactions

Announced date Target Target business description Acquirer EV €m
Dec 2016 dRofus BIM-based program, equipment and data management Nemetschek SE 24.5
Dec 2016 Deltek Inc Project-based ERP software Roper Technologies Inc 2609.3
Nov 2016 Exactal Group Limited Estimating software for the construction industry RIB Software AG n.a
Nov 2016 Building Data, Inc Mechanical, electrical and plumbing (MEP) software Trimble Navigation Limited n.a
Nov 2016 Comply Serve Ltd Assets Online project and product compliance software developer Bentley Systems Inc n.a
Oct 2016 iSqFt, Inc SaaS based preconstruction management solutions for the commercial construction industry Roper Technologies Inc 617.7
Oct 2016 Architectural Computer Services Inc Building specification software Alpine Investors n.a
Aug 2016 Multivista Systems LLC Construction documentation company Hexagon AB n.a
Jul 2016 Design Data Corporation BIM 3D modelling software for steel structures Nemetschek SE 44.0
Jul 2016 Union Square Software Limited AEC project management software Deltek Inc n.a
May 2016 Adenium Systems Inc onstruction workflow management software C Dodge Data & Analytics Inc n.a
Apr 2016 Textura Corporation Collaboration and productivity tools for construction industry Oracle Corporation 682.6
Mar 2016 Conject Holding GmbH Cloud and mobile collaboration software Aconex Limited 51.0

European activity

Whilst the US market still accounts for a significant proportion of M&A activity in the AEC software space, the European market has also witnessed some interesting activity. In March 2016, Australian-listed collaboration software business Aconex acquired German-based Conject Holding for €71m, as it looked to expand its market share in Europe and beyond.

German provider RIB Software has also been responsible for a number of acquisitions in the European market including Danish collaboration software business Byggeweb, a deal in which Clearwater International advised the sellers, and Spanish estimating software provider Soft SA.

US-based assets have though continued to dominate with regard to private equity investments. Headline deals have included Bain Capital’s €166m investment in Viewpoint Inc, whilst Pamlico Capital invested more than €90m in Dexter and Chaney, an ERP specialist in the sector.

Construction information providers have also proved very popular in the US market. Publisher McGraw Hill sold its construction division to Symphony Technology Group for €298m, whilst Reed Construction Data sold a 51% stake in its AEC segment to Warburg Pincus.

Within Europe deals have mostly been smaller but appetite amongst investors remains strong. In the UK YFM invested €5m in construction document management provider Business Collaborator, whilst LivingBridge Equity Partners acquired ERP construction specialist Eque2. Clearwater International advised on both of these transactions. In France construction predictive analytics firm Final CAD raised €18m in its Series B private equity round.

Private equity transactions – 2013 to date

Announced date Target Target business description Acquirer EV €m
Sep 2016 Final CAD Predictive analytics for the AEC market Serena Capital, Caphorn Invest and Aster Capital 18.0
Jan 2015 Sema GmbH Timber construction software Paragon Partners GmbH n.a
Nov 2014 Business Collaborator Ltd AEC collaboration software YFM Equity Partners 5.0
Oct 2014 Construction Software Technologes Inc Preconstruction SaaS Genstar Capital LLC n.a
Oct 2014 BidClerk Inc Construction search engine Genstar Capital LLC n.a
Dec 2014 Kirona Solutions Ltd Fieldforce automation solutions Livingbridge Equity Partners 20.0
Dec 2014 Dexter & Chaney Inc Construction project management software Pamlico Capital c 90.0
Sep 2014 McGraw Hill Construction Construction information service Symphony Technology Group 298.0
Jul 2014 Reed Construction Data Construction information service Warburg Pincus n.a
Apr 2014 Viewpoint Inc Construction planning software Bain Capital LLC 166.0
May 2013 Eque2 Limited ERP construction software Livingbridge Equity Partners 3.1

Hot spots

The AEC software market still remains relatively fragmented with a combination of both start-ups and established players occupying the landscape. We expect consolidation to continue as well as further private equity investment globally.

As growth projections in the BIM market continue to look strong, software providers that enable collaboration across the AEC supply chain will remain hot property, particularly those with a focus on BIM solutions post-design phase which is currently an underpenetrated market.

The move towards 5D BIM is also driving increased appetite for businesses with costing and time management capabilities. Oracle’s acquisition of Textura also demonstrated the strength of appetite for cloud-model businesses in the market, particularly those that have managed to build scale and a significant customer base.

Although the AEC market remains slower than most to adopt cloud technologies, vendors are investing ahead of the curve driving appetite for SaaS-model providers.

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