This article was written by Daphne Tomlinson, Independent Senior Research Associate at Memoori.
The last 12 months have seen a heightened level of M&A and Investment activity in the Facilities Management Software sector as vendors and service providers jostle for position in an increasingly competitive environment.
This category is focused on software solutions that manage and operate segments of the building lifecycle to assist Commercial Real Estate owners and operators. It includes software for optimizing space utilization, managing assets, scheduling and predicting maintenance (CMMS), Building Information Management (BIM), together with workplace management platforms including Integrated Workplace Management Systems (IWMS) and Computer Aided Facilities Management (CAFM) software. Note that Memoori excludes software solely used for lease accounting, capital planning and project management in this analysis.
We have tracked increasing levels of activity in this space over the last 3 years with the number of acquisitions rising from 13 in 2016 to 25 in 2018.
We reported in September on the entry of Architecture, Engineering and Construction (AEC) software provider, Nemetschek into the facilities management space. With the acquisition of MCS Solutions, Nemetschek acquired the Number 2 player in IWMS in Europe. With estimated 2018 revenues of 15 million Euros and a preliminary purchase price of EUR 46.1 million, the EV/Sales ratio was 3.1.
Nemetschek has continued its acquisition spree in January 2019 with its purchase of another IWMS player, Axxerion, based in the Netherlands. Axxerion’s workflow-based cloud software complements MCS’s IoT-enabled IWMS offering. Axxerion anticipates 2018 revenues of just over EUR 12 million. The purchase price amounts to around EUR 75 million (cash and debt free) making an EV/Sales ratio of 6.25.
By far, the largest deal in facilities management software last year was the $2 billion acquisition of the No. 1 pure player in the global facilities and asset management software market, Accruent, purchased by Fortive Corporation, a US diversified industrial conglomerate in July 2018. The strategic rationale for the acquisition was to advance Fortive’s digital strategy and strengthen their Field Solutions business with an IoT portfolio consisting of connected devices, software enabled workflows and data analytics.
Headquartered in Austin, Texas, Accruent has been on an acquisition spree to accelerate growth over the last 5 years and is certainly in a dominant position in the sector. The company has been private equity backed since 2010, when it was acquired by Vista Equity Partners. During their 4 year partnership with Vista, the company completed 4 strategic acquisitions and grew their customer base from 400 to over 1,200 customers.
In 2013, TA Associates, a global growth private equity firm, acquired a majority investment in Accruent, with Vista retaining a small minority share. According to the CEO, this allowed them to stay private and focused on their current strategy while leveraging TA’s global scale and deep industry expertise. In May 2016, Genstar Capital, a middle-market private equity firm acquired Accruent to accelerate growth and take the business to the next level. Under Genstar's watch, the company doubled its revenue, acquired 9 companies and expanded international growth.
Software solutions acquired by Accruent in the last three years include:
- BIGCenter (Business Integration Group) in September 2016, deepening its IWMS suite of solutions.
- Verisae, a US provider of cloud-based solutions that connect facilities and assets to the maintenance and service network through the Internet of Things (IoT), acquired in September 2016.
- Lucernex, a small IWMS vendor located in Texas, acquired in August 2017.
- Kykloud, a UK provider of facility asset maintenance & management software, acquired in January 2018.
- EMS Software, a US provider of a workplace and campus management platform, acquired in June 2018.
- Maintenance Connection, a US-based Computerized Maintenance Management System (CMMS) provider, acquired in June 2018.
Accruent was expected to generate revenues of $270 million in 2018. Memoori estimates that around 55% of these revenues (around $148 million) fall within our definition of facilities management software, excluding software solely used for lease accounting, capital planning and project management.
Two further significant IWMS deals last year were the acquisition of iOFFICE by a private equity firm and the merger of Serraview and Archibus.
iOFFICE, based in Houston, Texas and founded in 2002, was acquired by Waud Capital Partners, a growth-oriented private equity firm in October 2018. iOFFICE is a leading workforce-centric IWMS software provider with a SaaS platform designed for the Digital Workplace, offering solutions such as space planning, utilization, reservation and scheduling, maintenance requests and mobile workforce applications.
An injection of PE capital to accelerate growth also featured in the merger of Serraview and Archibus. ARCHIBUS, a provider of an Integrated Workplace Management System (IWMS) platform, and Serraview, an Australian cloud-based provider of space optimization and workforce enablement software, announced their merger in December 2018. JMI Equity made a strategic growth investment as part of the transaction. The combined company will offer an integrated, IoT powered, user friendly platform to effectively manage their real estate facilities, infrastructure and workplace assets.
Consolidation in the FM software sector is set to continue as workplace management platforms become critical components of data-driven facilities management.