HW AEC Software Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions 
  • 350+ professionals across eight office globally
  • 170+ closed transactions in the last 24 months
  • 10 industry groups

Focused Advisory Services

  • Mergers and Acquisitions (M&A)
  • Capital Raises
  • Corporate Divestitures

Consistent Recognition for Quality

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HW Technology, Media & Telecom (“TMT”) Group

  • 35+ professionals across Boston, San Francisco, and London

Key Themes

  • SaaS / Cloud
  • Data & Analytics
  • Digital Transformation
  • A.I. / Machine Learning

Horizontal Focus Areas

  • Application Software
  • Cloud Managed Services and Hosting Solutions
  • Compliance Solutions
  • CRM and Marketing Automation
  • Human Capital Management
  • Infrastructure and Security Software
  • IT and Tech-Enabled Services
  • Marketing, Research, and Insights Services

Vertical Focus Areas

  • Architecture, Engineering, and Construction Software
  • Education Technology and Services
  • Energy Technology
  • Facilities and Real Estate Software
  • Financial Technology and Payments
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • Internet and eCommerce
  • Retail Technology

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Architecture, Engineering, and Construction Software Focus Areas

Design

Solutions to aid in the design and modeling of buildings and infrastructure

  • Building Information Modeling
  • Computer-Aided Design

Select Market Participants

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Key Trends

Increased mandatory and voluntary adoption of 5D BIM across key project constituents

Integration of building lifecycle considerations, notably maintenance, operations, and energy usage, into the design stage resulting in increased complexity and demand for technology innovation

Plan

Solutions designed for builders to forecast and manage time, material, and costs before work begins

  • Bidding
  • Cost Estimating
  • Takeoff

Select Market Participants

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Key Trends

Incorporation of real-time material and cost data into the project planning stage to give owners and contractors greater clarity into project costs and timelines

Integration of third-party estimation and take-off tools into larger project management suites to create more seamless transitions between construction phases

Build

Solutions that manage the construction process

  • Project Management
  • Inventory and Supply Chain
  • Workforce Management

Select Market Participants

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Key Trends

Expansion of project management suites through addition of native tools or integration of third-party point solutions to create comprehensive platforms

Adoption of collaboration tools resulting in increased connectivity between the field and the office directly resulting in fewer cost overruns and more on-time project completions

Sources: Gartner, Freight Waves, and Logistics IT

What We’re Reading

Social Distancing Strategies Keep Contractors Productive

Construction Dive  June 24, 2020

As jobsites begin re-opening around the country, contractors face challenges in balancing productivity and social distancing. Detailed planning and management of workflow proximity and timing has become crucial. Measures like rotational office schedules, jobsite shift work, and infrared temperature screening have all been implemented to keep projects on track. Additionally, those working in close proximity to others have been encouraged to take frequent breaks in order to be able to remove masks and get fresh air.

Read the full article here

Residential Building Products: A New Take on Cyclicality and Investment Upside

Harris Williams  June 23, 2020

The residential building products sector was far healthier entering this COVID-19-driven recession than it was entering the Great Recession. This downturn will reset the conversation around building products cyclicality for the better. While the near-term outlook remains uncertain, we see the prospect for a quick recovery for the residential building products industry, followed by several years of solid growth, creating strong investment appetite and M&A activity.

Read the full article here

Tech, Stability May Move Gen Z Through the Trades Pipeline

Construction Dive  June 22, 2020

The Associated General Contractors (AGC) of California and several large employers have launched campaigns to recruit thousands of Generation Z (people born in the mid-1990s through early 2000s) into the construction trades. A lack of interest and rejection of manual labor and harsh outdoor work environments by tech-savvy college-bound high schoolers has kept the construction talent pipeline thin. Interestingly, the COVID-driven push towards digital training and construction tools has increased interest among Gen Z career seekers.

Read the full article here

Save the Construction Industry by Looking Within

Architect Magazine  June 12, 2020

The mission of many construction technology companies is “fixing” or “saving” the lagging industry. As the construction and housing industries are subject to major outside forces such as political volatility, infrastructure strategy, and job market volatility, the ConTech and PropTech continue to solve various issues, namely productivity. Startups and initiatives also aim to solve other real-world problems like the housing crisis, skilled labor shortage, and the industry’s impact on the environment.

Read the full article here

How Construction Can Emerge Stronger After Coronavirus

McKinsey & Company  May 8, 2020

The rapid tech adoption forced on construction companies by the coronavirus pandemic will continue in the short-term and post-pandemic. Sub-sectors like BIM, off-site construction, digitization, and sustainable building materials will continue to see increased investment over the long-term. An additional lesson learned from the pandemic is how much efficiency can be gained from leveraging construction technology in the face of skilled labor shortages and worksite restrictions.

Read the full article here.

U.S. Construction Activity Trends1

Overall Construction Spend

  • The value of construction put in place in Q2 was $1,356B, a slight decrease from the previous quarter
  • The growth in construction volume was driven mainly by increases in the residential and commercial construction sectors
  • Residential construction continues to be the largest contributor to construction activity, accounting for 40% of total construction spend, as the U.S. manages through a lack of inventory in single-family and multifamily housing

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Construction Employment

  • Employment in the construction industry was 7.0M in Q2, a slight decrease from the previous quarter
  • Construction job growth has remained steady since a trough in early 2010; however, the pace has lagged overall job growth across the economy
  • Unemployment in the construction industry increased due to the effects of COVID-19 but is declining from its peak in April 2020 as projects restart

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End-Market Focus: Residential Construction1,5

  • While the long-term economic impacts of COVID-19 remain unclear, residential construction spending and employment levels were robust heading into the slowdown with states declaring homebuilding an essential sector, keeping construction open and maintaining employment
  • While the traditional spring home buying season was disrupted by stay-at-home and social distancing guidelines, demand for single and multi-family housing is expected to rebound through the summer with early indications predicting robust demand
    • Mortgage application activity has rebounded, a leading indicator for home sales
    • Additionally, historically low mortgage rates and growing interest in moving from cities to suburbs have been driving purchasing activity
  • Demand for new homes has been especially pronounced in lower density markets, small metro areas, rural markets, and large metro suburbs, as prospective home buyers, increasingly working from home, seek different lifestyles

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Public Market Observations2

As of June 30, 2020

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Construction - Reference Only

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Recent AEC Software Transactions2,3,4

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Bentley Systems’ Acquisition of NoteVault

  • NoteVault is a provider of a voice-based field documentation application for the construction industry.
  • The Company’s solution enables customers to seamlessly capture and annotate voice and photo documentation on the construction site for long-term record keeping and enhanced field to office productivity and collaboration.
  • Following the acquisition, NoteVault will be integrated into Bentley’s SYNCHRO digital construction environment, expanding Bentley’s portfolio of mobile field applications to track and manage labor, materials, and equipment.

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Constellation’s Acquisition of LandDev

  • LandDev is a provider of a cloud-based land management software platform for commercial and residential land developers.
  • The Company’s software enables clients to manage acquisitions, control costs, and monitor cash flow to manage financial needs and improve vendor relations.
  • The acquisition follows years of collaboration and technical integration between Constellation and Land Dev, with Constellation planning to invest in product enhancements and extended customer care capacity post-acquisition.

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ServiceTitan’s Acquisition of Pointman

  • Pointman is a provider of SaaS field service management and operations management software to over 400 customers and 6,000 active users across the home contractor end-market.
  • The Company provides software for core operations management while offering additional features including coaching, analysis, feedback, and peer connections.
  • The acquisition of Pointman will expand ServiceTitan’s leadership in the field service management market while adding Pointman’s large established customer base.

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ECi’s Acquisition of BuildTools

  • BuildTools is a provider of a web-based construction management platform for custom home builders and remodelers.
  • The Company’s business management system provides solutions for project management, scheduling, document storage, and budget tracking designed for the unique needs of small volume builders.
  • Following the acquisition, ECi plans to invest in further platform development and customer success to expand into new markets and accelerate growth.

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Autodesk’s Investment in Aurigo

  • Aurigo is a provider of capital project and planning tools for large-scale infrastructure projects for local government agencies and municipal authorities.
  • The Company’s cloud-based solution offers a range of tools for project planning, portfolio management, EHS compliance, and property management.
  • As part of the investment, Autodesk intends to integrate Aurigo into the Autodesk Construction Cloud to provide capital asset owners with digital tools for full facility lifecycle management.

Large Market Opportunity Driving Significant M&A Activity

After decades of technological stagnation in the construction industry, rapid adoption of new technologies has driven strong M&A activity.

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Most Active AEC Software Consolidators3,4

AEC software vendors continue to consolidate the highly fragmented industry to establish platforms of scale.

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Note: Includes architecture, engineering, and construction sector control transactions made by parent or subsidiary.

M&A Transaction Activity3,4

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Recent AEC Software Private Placements3,4

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Note: Financial information presented above represents reported capital raised only.

AEC Trading Comparables2

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Public Comparables: Revenue Multiples2

CORE AEC and Product Design / Engineering Metrics

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Public Comparables: EBITDA Multiples2

CORE AEC and Product Design / Engineering Metrics

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AEC Software Landscape

To View full market map please contact: TMT_AEC@harriswilliams.com

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Case Study: ComputerEase

HW recently advised ComputerEase on its sale to Deltek, a subsidiary of Roper Technologies.

screen_shot_2020-08-11_at_3.24.44_pm.pngTransaction Overview

ComputerEase is a leading provider of mission-critical construction accounting, project management, and payroll processing solutions that enable contractors to manage and gain real-time visibility into their company’s operations and financial performance – whether in the office or remotely in the field.

ComputerEase’s fully integrated, cloud-based solution is purpose built to meet the unique needs of diverse contractor trades and sizes, with complex and varying union, labor, and equipment requirements. Today, more than 6,000 contractors rely on ComputerEase to streamline their operations and increase profits.

Deltek is a leading global provider of enterprise software and information solutions for project-based businesses. More than 23,000 organizations and millions of users in over 80 countries around the world rely on Deltek for superior levels of project intelligence, management, and collaboration. The company’s industry-focused expertise powers project success by helping firms achieve performance that maximizes productivity and revenue.

Relevant Sub-Sectors

  • ERP / project management
  • SaaS
  • Architecture, engineering, and Construction Software

Case Study: IQMS Software

HW advised IQMS, a portfolio company of Technology Crossover Ventures and Banneker Partners, on its sale to Dassault Systemes.

screen_shot_2020-08-11_at_3.27.31_pm.pngTransaction Overview

IQMS is a leading provider of fully integrated software solutions that manage, optimize, and automate production operations and back-office workflows for manufacturers across diverse end markets, globally.

Through its comprehensive manufacturing execution system (MES) and enterprise resource planning (ERP) software platform, IQMS’ solutions provide manufacturers with a comprehensive end-to-end suite that provides real-time visibility and actionable insights throughout the manufacturing life cycle.

IQMS serves over 1,000 long-standing customers across diverse end markets, including automotive, medical, packaging, consumer goods, electronics, and aerospace and defense in a growing $35 billion global market.

Dassault Systemes will help IQMS expand its customer base by leveraging the presence in the mid-market space established through Dassault’s SOLIDWORKS applications, which are delivered and supported by the company’s Professional Solutions global partner channel.

Relevant Sub-Sectors

  • Manufacturing & Operations
  • Manufacturing ERP Software
  • Industrial IoT

1. FRED

2. CapIQ

3. PitchBook

4. MergerMarket

5. NAHB/Wells Fargo Housing Market Index (HMI)