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

Select HW AEC Experience

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HW Current Market Observations and Insights

Current Market Observations

Economic Outlook

  • Volatility in the public markets will likely remain as investors, businesses, and policy-makers evaluate rapidly evolving COVID-19 developments
  • Economists and industry analysts expect a meaningful decline in GDP in Q2 and Q3, though they debate the shape and timing of the recovery

Buyer Sentiment

  • The desire to invest remains – buyers are actively seeking to deploy capital
  • Private equity firms and strategic acquirers have focused on meeting near-term operational needs and assessing the medium- to long-term impact of COVID-19
  • Despite economic uncertainty, financial sponsors have record levels of capital to deploy, and many are communicating that they are “open for business,” while acknowledging high-quality deal flow will be limited
  • As capital markets stabilize, companies with strong liquidity positions will be well-positioned to pursue acquisitions that accelerate growth

Debt Markets

  • In contrast to the first half of 1Q’20, debt markets have shifted to a risk-off mentality
  • Concerns over liquidity and funding availability contribute to uncertainty regarding the duration of the COVID-19 risk mitigation focus

M&A Valuations

  • COVID-19 has pushed time lines for many transactions, but select deals are still closing successfully. Some may be temporarily on hold, and others are preparing for market and carefully weighing timing
  • Companies that prove their ability to weather the current circumstances will receive significant interest and garner premium valuations

Latest HW Market Insights

For access to HW’s latest insight and perspective, email us at insights@harriswilliams.com or visit www.harriswilliams.com/news-insights

Recent Publications:

Deep Sector Expertise Across Key TMT Focus Areas

  • Architecture, Engineering, and Construction
  • Education Technology and Services
  • Financial Technology and Payments
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • …and more

For access to HW’s TMT content, email us at TMT_Insights@harriswilliams.com

Case Study: ComputerEase

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

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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.

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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

What We’re Reading

As Coronavirus Necessitates Technology Usage, Investors Seem Keen on ConTech 

Construction Dive  April 8, 2020

Investor sentiment among construction technology (contech) focused venture capital and private equity firms remains high, despite recent government-imposed limitations on construction activity. Many contractors are turning to tech to manage employees working remotely and turning to drones and robotic solutions to help with social distancing. Field focused contech firms may struggle in the near term, while solutions that deliver efficient workflows and back-end design and engineering are currently well positioned.

Read the full article here.

Consultant Predicts a Post-Coronavirus 'Construction Tsunami' 

Construction Dive  April 2, 2020

As the coronavirus has led to major supply chain disruptions in goods sourced from China, U.S. businesses will likely be hesitant to resume orders from this part of the world. This dynamic will lead to a surge in demand for new manufacturing- and supply chain-related projects as the country looks to re-shore manufacturing ability in the U.S. and Mexico. Pent-up sector-wide demand from current construction shutdowns will lead to a “construction tsunami” beginning in Q3 2020. Additionally, an expansion of the design-build delivery model could help deal with fast-moving situations like the coronavirus, where solving problems requires a team approach, flexibility, and fast decision making.

Read the full article here.

Coronavirus 2020 Technology Game Plan: Cut Costs to Survive but Accelerate Transformation 

Construction Dive  April 1, 2020

In the wake of the COVID-19 outbreak, companies are focusing on executing two distinct technology strategies: during and post-pandemic. In the near term, demand for cloud-based services has spiked, though IT services have declined sharply as IT projects have largely been put on hold. Risk mitigation has become the top priority as companies will focus on slashing budgets, but based on Gartner’s received inquiries, there is no change in appetite for talking about cloud migration. Those companies that are midway through cloud migration or automation projects will continue full steam ahead. 

Read the full article here.

Technological Advancements Disrupting the Global Construction Industry 

Ernst & Young LLP  March 23, 2020

Construction technology tools like Internet of Things (IoT) and Building Information Modeling (BIM) will continue to see steady growth between now and 2025. Niche-focused specialized solutions like smart building technologies and 3D printing will see more rapid growth. Additionally, full-scale digitization in the design and documentation process could lead to an estimated 12% to 20% increase in the industry’s current annual cost savings related to those tools in the next 10 years. 

Read the full article here.

Bentley Confidentially Files S-1

Business Wire  February 13, 2020

On February 13, Bentley Systems, the Exton, PA-based construction software company, announced that it had confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission relating to the proposed public listing of its Class B common stock. The business has been contemplating the idea of going public for years and received an additional €50M in investment from Siemens in 2018.

Read the full article here.

Procore Files S-1

Construction Dive  March 4, 2020

On February 28, Procore Technologies, the Carpinteria, CA-based construction project management software company, filed the required paperwork with the U.S. Securities and Exchange Commission announcing its plans for an initial public offering. The IPO is expected to value the company at over $4B. No date has been set for the listing.

Read the full article here.

Construction Activity Trends1

Overall Construction Spend

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  • The value of construction put in place in Q1 reached $1,367B, 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, as the U.S. manages through a lack of inventory in single-family and multifamily inventory

Construction Employment

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  • Employment in the construction industry reached 7.6M in Q1, remaining in line with 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 has remained below overall unemployment as demand for skilled trades outweighs the supply of specialty contractors

Recent AEC Software Transactions2,3,4

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Thoma Bravo’s Pending Acquisition of Command Alkon

  • Command Alkon is a provider of a supply chain integration and digital collaboration platform for the heavy construction ecosystem
  • The Company's cloud-based solution enables contractors and project owners to digitally connect with their heavy material suppliers, producers, and haulers to automate inter-company workflows and provide visibility into real-time order status
  • Post acquisition, Thoma Bravo plans to invest in next-generation cloud capabilities to speed Command Alkon’s integration into inter-company supply chain operations in heavy construction

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Bentley Systems’ Acquisition of GroupBC

  • GroupBC is a provider of data and information management software for construction project and built asset management 
  • The Company’s cloud-based common data environment enables project teams and stakeholders to collaborate, manage, and share documents, data, and spatial information from a centralized, secure platform
  • The acquisition of GroupBC follows years of collaboration with Bentley and will allow the combined organization to better serve engineers, contractors, and owners by bringing together their collective information management, operational technologies, and engineering models across a common collaboration platform

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Battery Ventures’ Acquisition of WinWorker

  • WinWorker is a provider of business and field service management software for trade craftsmen
  • The Company’s desktop and mobile software provides trade contractors, primarily painters, roofers, and landscapers, with tools for workforce management and scheduling, material management, and resource planning amongst a list of additional functional modules
  • Post acquisition, Battery plans to accelerate the company's growth through continued product innovation, enhanced customer service, and the establishment of new partnerships with key industry organizations

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Schneider Electric’s Pending Acquisition of RIB Software

  • RIB is a global provider of a portfolio of ERP and Building Information Modeling (BIM) software solutions for the construction industry
  • The Company's flagship cloud-based construction ERP platform provides project stakeholders native 5D BIM integration and advanced AI tools to manage projects in real time and collaborate across work streams
  • With the acquisition of RIB, Schneider will now be able to provide customers with a suite of energy management solutions that encompass the entire building life cycle from construction through operations

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Built’s Acquisition of Lienwaivers.io

  • Lienwaivers.io is a provider of lien waiver management and payment solutions for commercial and residential construction
  • The Company’s API provides a direct integration with the leading construction project management platforms, enabling customers to seamlessly request, collect, and track their lien waivers and payments from within their project management solution
  • The acquisition of Lienwaivers positions Built as the first full-stack construction finance platform, providing solutions for key stakeholders in the construction finance process

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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Active AEC Software Consolidators3,4

AEC software providers 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

Select Recent M&A Transactions

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Recent AEC Software Private Placements3,4

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

Public Market Observations2

As of March 31, 2020

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Notable Public Market Activity2,3,4

Schneider Electric Offers Tender Offer for (2/13/20)

Read the full article here.

  • Schneider Electric launched a €29 per share tender offer to acquire RIB
  • The combination with RIB will enable Schneider to provide its customers with an integrated suite of building management tools from construction through operation

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Procore Files S-1 (2/28/20)

Read the full article here.

  • Procore, the Bessemer Venture, Tiger Global, and ICONIQ backed construction company, recently filed its S-1 with the SEC after years of speculation on its IPO timing
  • The Carpinteria, CA-based company had raised a total of $490M, the most recent round valuing the company at $4.6B
  • A time line for the listing has not been set

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AEC Trading Comparables2

Valuation and Operating Metrics

As of March 31, 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 Multiples2

Core AEC and Product Design / Engingeering Metrics

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AEC Software Landscape

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

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1. FRED

2. CapIQ

3. PitchBook

4. MergerMarket

 

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent. 

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8th Floor, 20 Farringdon Street, London EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. DE321666994). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.