HW AEC Software Introduction

Harris Williams (“HW”) as a Firm 

  • 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
  • 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 life cycle 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, materials, 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

How Incremental Innovation Can Benefit Your Construction Business

For Construction Pros  September 21, 2020

The construction industry is poised for change as technology takes hold, but that change is likely to come less in the form of disruption and more in the form of impactful increments. Throughout the pandemic, construction has been affected materially, but not to the degree of many other industries, due to its “essential” designation; therefore, the worry isn’t now, but nine months from now.

Read the full article here.

How Data is Helping Contractors Survive the Coronavirus

Engineering News-Record  August 26, 2020

As construction companies face exceptional levels of uncertainty due to the impact of COVID and the upcoming election, contractors are desperate for signals of future demand. Especially important are how drivers of demand will vary by region and type of structure, as well as the prospects of supply-chain disruptions, raw materials prices, and availability of employees. With all this uncertainty, there is an increased need for collection and utilization of actionable data to help contractors make more informed decisions over the coming years.

Read the full article here.

Home Builders Enjoy Covid Immunity, for Now

The Wall Street Journal  August 17, 2020

The National Association of Home Builders (NAHB) reported that its index hit a record-high in July as home builder sentiment continues to climb. The home builder market appears more capable and resilient of weathering the economic disruption than many other industries. Record-low interest rates, a demand for homes outside of core urban areas, and a customer base that has proven to be more financially secure and less impacted by job losses from COVID has resulted in continued demand for new single-family housing stock.

Read the full article here.

COVID-19 Puts an Emphasis on the Benefits of Prefabrication, Communication Tech, Paperless Jobsites

Construction Dive  July 15, 2020

The challenges arising from the coronavirus pandemic have led to an increased interest in prefabrication, collaboration, and communication tools for project stakeholders, and the potential for paperless jobsites. The limited access to jobsites and remote work for the broader office and project management teams has placed an increased emphasis on collaboration and communication tools for project stakeholders.

Read the full article here.

Midyear 2020 Engineering and Construction Industry Outlook

Deloitte

This year began on a positive note for the sector, with first-quarter growth in total construction spend. However, as companies started to gauge the impact of COVID-19 on the US engineering and construction industry toward the end of Q1, confidence among industry leaders plummeted. Though there’s still uncertainty and challenges from COVID-19’s impact on the engineering and construction industry, the path forward includes a focus on several bright spots in certain end markets and approaches.

Read the full article here.

U.S. Construction Activity Trends1

Overall Construction Spend

  • The value of construction put in place in Q3 was $1,413B, a slight increase 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 7.2M in Q3, an increase 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 has significantly declined from its peak in April 2020, as it returns to pre-COVID levels

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Public Market Observations2

As of September 30, 2020

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Recent AEC Software Transactions2,3,4

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Emerson Electric’s Acquisition of Open Systems International (OSI)

  • OSI is a provider of power grid management software to utility companies across the global power industry.
  • The Company’s solutions are used to monitor, control, and optimize the real-time operation of large-scale power grids.
  • The acquisition of OSI will expand Emerson’s current portfolio of solutions for utility customers, providing them with increased visibility into the current status of their power systems and enabling them to optimize energy efficiency from generation through customer delivery.
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Autodesk’s Growth Investment in Bridgit

  • Bridgit is a provider of construction workforce planning software for residential and commercial builders to manage workload tasks.
  • The Company's platform provides builders with the ability to manage workforce utilization and capacity, resource allocation, skills tracking, and employee scheduling while providing a real-time view of workforce allocation.
  • Bridgit plans to use Autodesk's investment to increase the pace of technology innovation, add new partner integrations, and build additional features to help contractors understand their workforce utilization and resource planning.
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Clayton, Dubilier & Rice’s Pending Acquisition of Epicor Software

  • Epicor Software is a provider of ERP software for the manufacturing, distribution, retail, and services sectors.
  • The Company provides ERP software, retail management, content management, e-commerce, and other back-end business management software to over 20,000 customers globally.
  • Post-acquisition, CD&R will continue to support Epicor's growth through investments to expand the existing product portfolio and enhance their ability to support an ever-increasing range of customer needs.
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Thoma Bravo’s Acquisition of Foundation Software

  • Foundation Software is a provider of construction accounting and payroll software for small and mid-sized general and specialty contractors.
  • The Company’s solution offers tools for project management, payroll processing, and construction accounting.
  • Following the acquisition, Foundation Software will leverage Thoma Bravo's capital and expertise in enterprise software to accelerate growth and further product development to enhance their portfolio of solutions for contractors.
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Autodesk’s Acquisition of Pype

  • Pype is a provider of cloud-based solutions for automating construction project management workflows.
  • The Company’s solution uses AI and machine learning to extract and process data from project plans and specifications to gain insights on project management workflows.
  • Following the acquisition, Pype will be integrated into the Autodesk Construction Cloud, allowing general contractors, subcontractors, and owners to automate workflows and project closeouts and reduce risk throughout the project life cycle.

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.

Recent AEC Transactions

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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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Select Drivers of Consolidation

  1. Desire by strategics to create platforms to manage the entire construction life cycle – design, build, and operate

  2. Pressure for detailed project information to be available and shared in real time across project stakeholders

  3. Adoption and integration of field and mobile tools into the jobsite to enhance productivity, safety, and project economics

  4. Rapidly increasing usage of 5D BIM by key project constituents

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

Select Private Placements

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

AEC Trading Comparables2

Valuation and Operating Metrics

As of September 30, 2020 ($ in millions, excl. stock price)

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Public Comparables: Revenue Multiples2

CORE AEC and Product Design / Engineering Metrics

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Public Comparables: EBITDA Multiples

CORE AEC and Product Design / Engineering Metrics

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AEC Software Landscape

To View full market map please contact: hwTMT_AEC/RE@harriswilliams.com

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Case Study: ComplyWorks

HW recently advised Veriforce, a portfolio company of Thoma Bravo, on its acquisition of ComplyWorks

screen_shot_2020-10-29_at_4.15.49_pm.pngTransaction Overview

ComplyWorks is a premier provider of web-based solutions that cover the entire compliance life cycle from contractor management to workforce management, worksite management, and payment.

ComplyWorks’ SaaS platform has global capabilities and local deployment to offer web-based governance, risk management, and compliance (GRC) services, helping employers and suppliers manage the compliance of their suppliers, sub-contractors, workforces, and worksites. Today, ComplyWorks has clients in over 120 countries.

Veriforce is a leader in delivering comprehensive, integrated supply chain risk management solutions that help bring workers home safely and optimize business performance. With the acquisition of ComplyWorks, the combined platform will serve 800 companies in 120 countries and engage with an estimated 50,000 contractors and millions of individuals.

Relevant Sub-Sectors

  • Compliance
  • SaaS
  • Architecture, Engineering, and Construction Software

Case Study: ComputerEase

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

screen_shot_2020-10-29_at_4.17.43_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 companies’ 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.

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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)