Understanding M&A in the Design and Engineering Software Market

by David Land

This chart takes a look at acquisition data based on the research that feeds into the Cambashi Product Observatory.

It shows the merger & acquisition (M&A) activity of some of the main providers in our coverage over the past 5 years.

Acquisitions by provider for the engineering software market

Data is based on publicly reported information and estimates based on available pre-acquisition data. For 2015 (dashed circles) complete information is not yet available for some companies and is likely to be underestimated.

These 6 companies have shown a continuing use of acquisition in business growth. The total deal value over the period shown is in excess of $8Bn. However, the distribution in the chart clearly shows differences of approach between these companies.

The Breakdown

Autodesk have gone down the route of acquiring smaller companies (they have the lowest average deal size within this peer group) primarily for technology and knowledge asset acquisition.

This supports an approach of completing the overall offer and the move to cloud. For example, Graitec’s Advance Steel and Advance Concrete product lines, Datastay into PLM 360, Lagoa cloud visualization platform and Bitsquid (now Stringray) cementing their position in the games industry.

On top of all this, larger acquisitions like Delcam have also helped to expand their user base reach in manufacturing.

In contrast Dassault Systemes have acquired fewer companies and have the largest average deal size of this group.

This is a clear sign of the strategic goal of doubling their addressable market by expanding into new sectors, requiring some sizable acquisitions such as Gemcom (now GEOVIA) and Accelrys (now BIOVIA).

Their portfolio in their established markets is strong and largely driven by internal technology developments so limiting the need to make smaller technology and skills based acquisitions.

Nemetschek completed many acquisitions before the period shown acquiring brands such as Graphisoft, Maxon, Vectorworks and SCIA as part of a longer term strategy for developing wider BIM offerings and the recent Solibri and Bluebeam deals have continued this direction.

The acquisition of Bluebeam has also had a significant impact in the group’s revenues in the US and continues to indicate the need to grow further beyond their base in EMEA in particular Germany.

The Trimble data might be slightly misleading as they have been acquiring many companies across their portfolio, not all of which are software companies. However, the list of those companies is still impressive:

  • Meridian Systems
  • Accubid
  • Tekla
  • PlanCAL
  • AceCad Software
  • SketchUP
  • WinEst
  • Vico Software
  • CSC
  • Manhattan
  • Gehry Technologies
  • Vianova

These buys further their Engineering & Construction Business segment and their Design-Build-Operate (DBO) platform.

PTC’s focused acquisition strategy related to Internet of Things (IoT)(Axeda, Atego, Thingworx) puts it second only to Dassault in terms of average deal size in this period.

This is both a technology grab and an early market share play within the IoT sector.

However, PTC are not alone in this and other PLM providers have seen the future opportunities in IoT, something reflected by:

  • Dassault acquiring Geensoft (2010)
  • Ansys acquiring Esterel (2012)
  • Autodesk acquiring SeeControl (2015)

We have selected some of the most active providers in this analysis, but there are several other significant players in this market who have made acquisitions in this period.

Siemens PLM, for example, continue to make significant progress in their portfolio through both small and large deals such as Vistagy and Camstar and more recently with Polarion Software.

Although our coverage of 2015 is not yet complete the view here would tend to indicate a reduction in both size and volume of deals across this group.

UPDATE: On 26/01/16 Siemens announced their intention to buy US-based simulation software provider CD-adapco for around $970 million.

The company will be integrated into Siemens’ Digital Factory Division, alongside its existing industrial software and factory automation portfolio.

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