The construction industry is used to disruption. It was already starting to experience disruptive elements before the global pandemic and, as the effects of the pandemic have unfolded, there has been a significant increase in corporate restructuring and merger and acquisition (M&A) activity in the industry.
Cambashi research data reveals that the disruption is particularly evident in the area of BIM (Building Information Modeling) software. BIM is basically the foundation of digital transformation in the architecture, engineering and construction (AEC) industry, and incorporates three key areas:
· BIM Design, which includes software for the design of building and infrastructure projects
· BIM Construct, which covers software for collaboration on planning and building
· BIM Operate, which includes software for facilities management.
BIM Design has become a well-developed space over many years, and now many of the BIM Design software providers have expanded into the areas of BIM Construct.
There has been a clear convergence between the software vendors within the BIM Construct and BIM Operate market areas, with partnerships and acquisitions enabling larger players to gain access across the entire BIM lifecycle.
Providers making acquisitions in 2022/21 in order to achieve this include: Autodesk, Nemetschek Group, Bentley Systems, Hexagon AB, MRI Software, Procore Technologies, Schneider Electric, SpaceIQ, Thinkproject and Trimble Inc..
Overall, it is interesting to look at the investor relations output from some of the larger players and how they are seeking to acquire technologies that previously were missing from their portfolios. They seem to be attempting to create a start-up profile, spanning technologies or companies that they know will help them create a larger platform in the future.
Investment in BIM Software providers
Investment by BIM Software providers has become more of a regular occurrence over the past few years. Start-ups have been gaining from these mutually beneficial partnerships to help innovate the latest technology.
In August 2021 Trimble Inc. created Trimble Ventures, a venture fund focused on investing in early and growth-stage innovative companies that align with Trimble’s mission of transforming work in the agriculture, construction, geospatial and transportation industries.
The fund launched with $200 million allocated for investments, with a focus on companies with the potential for technology-enabled innovation and disruption in the digital transformation of the industries Trimble serves.
Autodesk has invested in many different companies across its portfolio of manufacturing and media and entertainment, and AEC, for example, providing funding for Toric (2022) of $16 million. In addition to this investment round, Autodesk also established a partnership with Toric, which will allow the company to integrate its capabilities into current Autodesk BIM products such as Revit, Navisworks and Civil 3D.
Bentley Systems Acceleration Initiatives have offered multiple funding to various companies over the past few years.
It has also been interesting to see how many companies Schneider Electric has acquired across different parts of its business. They have been buying quite a decent-sized share of some companies, but not a controlling share. For example, in 2020 Schneider Electric acquired a minority shareholder position in Planon.
Many of these investments have now been completed into full acquisitions and have now been included under a new Energy Management division, like RIB Software.
As mentioned earlier, the large established software providers are attempting to create a start-up profile, spanning technologies or companies that they know will help them create a larger platform in the future.
Autodesk is certainly the largest BIM Design software provider and has been building up the BIM Construct sector over the last couple of years.
Autodesk has been completing its full BIM lifecycle across Design-Construct-Operate following a large acquisition run in 2018/19, building up its Construct products, acquiring PlanGrid, an Autodesk company, ASSEMBLE Systems and BuildingConnected (for around $850million, undisclosed and $275million respectively).
Autodesk increased its coverage in the civil engineering sector, particularly in the water infrastructure market, by acquiring Autodesk Innovyze for approximately $1billion in 2021. This move was to help the company position itself as one of the leading global providers of end-to-end digital solutions, from design to operations of water infrastructure and accelerating its #digitaltwin strategy in this area.
In January 2022 it acquired ProEst Estimating Software, a cloud-based solution that enables construction companies to create estimates, perform digital take-offs, generate reports and proposals, and manage bid-day processes to further add to their Construction cloud portfolio.
In March 2022 it acquired Prospect by IrisVR and The Wild to help with an expansion into immersive (VR/AR) technology and build tools that accelerate digital transformation and collaboration in AEC.
Nemetschek acquired MCS Solutions and Axxerion Inc. to create SPACEWELL | A Nemetschek Company, a brand designated to focus on the BIM Operate market which complements its BIM Construct brands, such as Nervaris and Solibri.
The company has also continued to build strength in BIM due to the ongoing digitalization of construction and a more mixed outlook for ‘Manage’ software. The company quoted Cambashi`s BIM Observatory in its factsheet, showing TAM (total addressable market) share and penetration.
Nemetschek has three different criteria for acquisitions:
· Umbrella company-level acquisitions to create new brands (which must be of a certain size and generate a turnover around €10 million in addition to expecting strong growth
· Brand-level acquisitions to help develop technology, geographic expansion or sales. In 2022 Nemetschek performed more brand-level acquisitions
· Investment in young, innovative companies.
Similarly, in April 2022 FRILO Software GmbH | A Nemetschek Company successfully completed the acquisition of the software company DC-Software Doster & Christmann GmbH. This acquisition will help FRILO with strategically expanding its product portfolio in the foundation engineering segment and thus strengthening its position as a leading provider of structural design programs.
In February 2023, Nemetschek conducted a strategic start-up investment in Construction Project Analytics provider called SmartPM Technologies, Inc.
Since its IPO, Bentley has acquired many companies across different areas of AEC and BIM.
During 2022 Bentley completed two notable acquisitions, Adina and Eagle.io. Adina is a leading developer of finite element analysis software applications used in a comprehensively diverse range of engineering fields. Eagle.io is a provider of a leading cloud-based environmental Internet of Things (IoT) platform and was acquired in August 2022 via the Bentley Acceleration Initiatives, a strategic investment fund and incubator initiative of Bentley Systems.
The acquisition of Eagle.io will help Bentley augment its infrastructure IoT offerings, expand its footprint in the Australia, New Zealand, and Asia Pacific regions, and add to its capabilities of providing evergreen infrastructure digital twins globally.
Across 2021 Bentley completed several acquisitions including Seequent, Powerline Systems, SPIDA, A Bentley Company, Senesmetrics, Vista Data Vision, and INRO Software, which have seen Bentley grow its coverage across civil/geophysical engineering, plant/power and infrastructure engineering simulation.
Other key players
Large BIM Operate players such as MRI have also been on an acquisition spree, hoovering up many of the smaller BIM Operate vendors to create one of the largest portfolios in the sector. This includes buying assets from other BIM providers such as Trimble (e.g. Manhattan), which is moving out of this area to focus on its core Connected Construction capabilities within the BIM Construction area.
Hexagon AB also expanded further into BIM in 2022. In September 2022 it acquired iConstruct, a provider of award-winning BIM software used in commercial, infrastructure and industrial construction. It also completed the acquisition of Infor’s global EAM (enterprise asset management) business in October 2021. Both acquired companies will operate as part of Hexagon’s Asset Lifecycle Intelligence division.
In June 2022 Smart Infrastructure (SI) announced it was to acquire Brightly, a leader in cloud-based asset and maintenance management software. This acquisition complements Siemens’ digital offerings for buildings, with strength in asset and energy management and further adds to the December 2021 acquisition of EcoDomus and its cloud-based building operations twin software and building management platform, Desigo CC.
It will also be interesting to see whether Siemens plans to do anything further with its investment in Bentley, held via the Siemens Digital Industries group.
Archibus (now SpaceIQ) went on a bit of a buying spree also, creating a large player. It acquired SpaceIQ, Serraview by Eptura, and iOFFICE, the latter having recently received an investment from Autodesk. We anticipate a closer alignment between these companies’ portfolios in the future.