HW AEC Software Introduction

Harris Williams (“HW”) as a Firm 

  • 25+ years and more than 1,000 closed transactions 
  • 350+ professionals across eight offices 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 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

Construction App Esage Increases Despite Continued Lack of Integration

January 6, 2021Construction Dive

The average number of apps a construction worker uses on the job continues to grow according to a new report from JBKnowledge. Smartphones remain the most utilized mobile device on construction sites as the number of apps that the workers leverage increases. The most used apps include Procore for daily reporting, Bluebeam for viewing BIM files, and ToolWatch for tool tracking. However, a lack of integration and data sharing between those apps continues to be a problem with over half of workers forced to manually integrate data between applications.

Read the full article here

Accelerate Innovation as the Pandemic Lingers, But Keep Your Firm’s Adoption Rigor

December 31, 2020 | Engineering News-Record

Construction and design professionals have an unfair reputation for being resistant to change. In an industry where clients are using the end product for the long term, mistakes are magnified and new technology must be fully validated as an improvement over the tried and true. However, COVID-19 has put an urgency on several issues and the industry needs to think more systematically about what technologies it pursues in order to accelerate efficiencies in a tighter market.

Read the full article here

Pandemic Has Accelerated Contech Adoption

December 9, 2020Construction Dive

The construction industry accelerated tech adoption by three years in 2020 over the historical annual rate according to commercial real estate services firm JLL’s latest “State of Construction Tech” report. Accelerated adoption was most evident in several high-impact areas of Contech, including digital collaboration, scanning, safety, wearables, BIM, and CAD. JLL estimates that the foundational technologies that will form the basis of technology programs in the post-pandemic years will be BIM, CAD, AI, and digital collaboration.

Read the full article here

Construction Tech Startups are Poised to Shake Up a $1.3-Trillion Industry

November 17, 2020 Tech Crunch

The construction industry has historically had multiple barriers to technology adoption, primarily fragmentation and number of project stakeholders, limited in-house IT resources to manage multiple point solutions, and low institutional risk tolerance given potential liabilities for projects. Coming out of the COVID-19 pandemic, the need for technology solutions to increase labor productivity will be critical. As prior recessions have indicated that construction jobs tend to bounce back slower than construction volume, deploying new technologies will be critical to bridging the productivity gap over the next few years.

Read the full article here

Rise of the Platform Era: The Next Chapter in Construction Technology

October 30, 2020McKinsey

Significant opportunities exist for strategic and financial investors across the construction technology ecosystem as the industry shifts toward integrated software platforms and away from multiple point-solutions. The pandemic-driven mandate for change and technological adoption in construction has provided additional urgency to preexisting productivity and data-visibility issues. Key potential paths for investors include focusing on distinctive point solutions or investments that help build or scale the adoption of Contech platforms.

Read the full article here

U.S. Construction Year-End Review1,2

Overall Construction Spend

  • The value of construction put in place reached an all-time high in November, at a seasonally adjusted annual rate of $1.46T or 3.8% above November 2019
  • Construction spending through Nov. 2020 has been a tale of two industries, with private residential construction rising for six consecutive months, while private commercial construction declined for the fifth straight month
  • Residential construction continues to be the largest contributor to construction activity, accounting for ~46% of total construction spend
  • For single family homes, starts were up 11% over 2019

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Construction Employment

  • Construction employment in 2020 closed down 142k jobs compared to Dec. 2019
  • Average weekly hours worked in 2020 were also down ~1% compared to 2019
  • Unemployment in the construction industry increased due to the effects of COVID-19 in the early part of the year but has since risen to near pre-COVID levels as workers return to construction sites

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Public Market Observations3

As of December 31, 2020

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Recent AEC Software Transactions3,4,5

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Bain Capital Tech Opportunities and HGGC’s Growth Investment in Buildertrend

  • Buildertrend is a provider of cloud-based software for homebuilders, remodelers, and specialty contractors.
  • The Company’s solutions enable residential construction contractors to improve customer communication and visibility by standardizing scheduling and workflows, facilitating payments, and managing purchase and change orders.
  • Bain Capital and HGGC’s investment in Buildertrend will accelerate the Company’s growth trajectory by supporting strategic acquisitions and expansion into adjacent offerings such as payments, data analytics, and contractor services.

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EQT’s Acquisition of thinkproject

  • thinkproject is a cloud-based provider of construction intelligence solutions for the Architecture, Engineering, Construction market.
  • The Company’s solutions help more than 250,000 users across 60 countries improve delivery times, reduce waste and energy consumption, and improve sustainability.
  • Going forward thinkproject will continue to expand its presence across Europe and Asia-Pacific, leveraging EQT’s domain knowledge in the AEC market and digital and sustainability expertise

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Command Alkon’s Acquisition of Trimble’s Construction Logistics Business

  • Trimble’s construction logistics business is a provider of telematics solutions for the concrete delivery market.
  • The Company’s solutions enable ready-mix concrete and aggregate delivery managers to track, schedule, and communicate across their fleets.
  • The acquisition of Trimble’s construction logistics business will add telematics capabilities and ready-mix / aggregate delivery customer relationships to Command Alkon’s leading heavy construction fleet and workforce management solutions.

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True Wind Capital’s Acquisition of AIA Contract Documents

  • AIA Contract Documents is a provider of customizable legal contracts for the AEC industry.
  • The Company has been the industry standard provider of AEC-specific legal documents for over 130 years.
  • Post-acquisition, True Wind will leverage its deep expertise in enterprise software and construction technology to accelerate growth and further product development to support key design and construction stakeholders.

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Stone Point Capital and GreyLion Capital’s Growth Investment in Hyphen Solutions

  • Hyphen Solutions is a provider of cloud-based residential construction management software for enterprise homebuilders.
  • The Company’s supply chain scheduling, procurement, and collaboration solutions deliver home builders and suppliers greater operational control, enhanced communication, and increased productivity across the value chain.
  • The new investment from Stone Point and continued support from GreyLion will enable Hyphen to accelerate sales across new products, notably Hyphen Wallet, and support expansion into new markets and geographies via organic and inorganic growth initiatives.

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 Consolidators3,4,5

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

Notable Industry Consolidators Deal Count

(Number of Acquisitions)

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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 Activity3,4,5

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Recent AEC Software Private Placements3,4,5

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

AEC Trading Comparables3

Valuation and Operating Metrics 

As of December 31, 2020  ($ in millions, excl. stock price)

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Public Comparables: Revenue Multiples3

CORE AEC and Product Design / Engineering Metrics

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Public Comparables: EBITDA Multiples3

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_2021-01-29_at_12.54.42_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_2021-01-29_at_12.56.33_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.

screen_shot_2021-01-29_at_12.58.17_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. Associated General Contractors of America (ACG)

3. CapIQ

4. PitchBook

5. MergerMarket

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