Tekton Group, the UK’s fastest growing construction software specialist, has acquired software house SiteStream from its US owner Mitek Systems in a £12.6 million deal which also includes a recapitalisation of the business.
The Manchester office of Clearwater Corporate Finance advised Tekton on the deal, which give the group a stronger presence in the housebuilding sector and help towards its goal of becoming the market leader in construction industry software.
It is the fourth acquisition within 12 months by Manchester-based Tekton Group. Formed in 2005 through the management buy-out of Intuita Limited and the simultaneous acquisition of EVision, it went on to acquire Construction Information Technologies (CIT) in June 2006.
The deal will allow a partial release of equity for major shareholder Richard Beaton, a serial entrepreneur who led the original management buy-out and who has bought and sold over 20 software businesses in his career to date. He will remain as CEO of the business. The deal was funded by Inflexion Private Equity Partners, with HSBC providing bank debt. YFM Private Equity, which supported the 2005 buy-out, will retain a minority stake in the business.
Tekton Group, which employs 54 people, has sites at Livingston, Scotland and Barton-under-Needwood, Staffordshire in addition to the Manchester headquarters. The acquisition of SiteStream will add a fourth location in Farnham, Surrey.
Through its three main products, Tekton caters for construction companies of all sizes, from blue-chip names like Wates and Skansa to SMEs. Its Unison construction suite is a fully integrated management system covering all aspects of a client’s business and is marketed principally to top 30 contractors in the UK.
Build-IT is marketed to contractors, housebuilders and sub-contractors in the SME space with clients typically in the range of £10 million to £300 million turnover. C21 comprises estimating and valuations applications and is appropriate to construction companies of all sizes including professional practices. Tekton also works with clients to develop new bespoke systems and has partnerships with other software companies such as Microsoft.
SiteStream is the most technically advanced software system available to housebuilders, with five of the top 20 UK companies in the sector as clients. The company has already started to penetrate the US market and is increasing its geographic spread by appointing distributors in Australia and South Africa.
Tekton achieved a turnover of £6.5 million in 2006 and expects to increase that to £8.9 million in 2007 through the acquisition of SiteStream and the growth of its existing business.
Commenting on the deal Richard Beaton said: “We look forward to working with Inflexion and taking the group to the next level of its development building on the benefits that SiteStream’s incorporation will bring. Inflexion’s added financial and strategic input will benefit the company in enabling further market penetration as well as developing and introducing new products into new markets.”
Carl Houghton of Clearwater Corporate Finance added: “We are pleased to be working with Tekton once again. It is the third deal we have advised them on and the fifth time we have worked with Richard Beaton.
“Under his leadership Tekton has become the UK’s fastest growing construction software specialist and has huge potential for further growth. While the construction sector is a vibrant part of the UK economy, the software market is extremely fragmented and the opportunity exists for Tekton to continue the consolidation of this market and become the industry leader.
The acquisition of SiteStream is in line with this strategy and will also enable it to widen its offering by adding the UK’s most popular housebuilding system to its already impressive range of products. With increases in housebuilding and continued population growth and increased public sector investment in infrastructure, the future looks bright for Tekton.”