Over the last couple of weeks San Francisco based private equity firm Vista Equity Partners caused substantial rumor in the IWMS industry with their acquisitions of Intuit Real Estate Solutions (IRES), and more recently Accruent. Both IWMS vendors are considered to be the in the top-10 IWMS vendors worldwide.
As a response both Tririga and Lucernex offered migration plans and discounts for displaced customers. To me, the acquisitions by Vista Equity Partners are a clear indication that the IWMS Market is maturing fast. As any industry matures more and more organizations join the party. In the IWMS industry the dance of mergers and acquisitions has begun, therefore this week’s debate is about the recent vendor acquisitions.
Debate
Are Vista Equity Partners’ acquisitions a positive thing for IWMS Industry?
Related Posts
- Intuit to Sell Intuit Real Estate Solutions to Vista Equity Partners
- MRI reemerges as Vista Equity Partners Completes acquisition of Intuit Real Estate Solutions from Intuit Inc.
- Accruent Joins the Vista Equity Partners Portfolio
- Debate: The Impact Of The Revised BOMA Standards on IWMS
- Has the endgame in the IWMS industry started?
Accruent’s acquisition by Vista Equity Partners increases uncertainty about product enhancements, technical support and implementation services.
How will Accruent’s service response times be affected?
Will Accruent’s promised enhancements be delivered?
Will Accruent implementation projects see reduced staffing?
With TRIRIGA’s extensive experience with leading retail and public sector customers, commitment to innovation, and strong financial performance: a switch to TRIRIGA can eliminate this uncertainty.
For details of TRIRIGA’s Free Offer for Customers Affected by Accruent Acquisition visit http://www.tririga.com/material/accruent_acquisition_upgrade_offer?ecid=12
John Clark
TRIRIGA Inc.
http://www.tririga.com
Update: Again two companies offer migration plans for Accruent customers: Planon and AMTDirect.
Having been involved with the IWMS industry for over 25 years, I have seen many trends come and go including some of the early attempts by the commercial real estate firms to enter the lease administration software business when outsourcing first appeared, to the focus on retailers, the shift toward real estate life-cycle and IWMS to the more recent set of events attempting to consolidate the industry. I sold my company, National Facilities Group, Inc. (the SLIM product) several years ago to Accruent and know what it means to be acquired and how it affects products and clients. In my case, there were a number of factors that made the event successful including the huge economic growth that was happening, the move to large suites of point-solutions – creating full real estate lifecycle applications and the fact that there was no clear leader in the space.
The question asked today is, “Is the acquisition of MRI and Accruent a good thing?” Emphatically, I have to say “NO”! Unlike the liquidity events of years past where these companies announced the raising of millions of dollars to fuel internal growth and expansion, this recent event is simply a sale. Instead of acquiring new sources of capital, Accruent and MRI have been acquired by the capital sources. Fundamentally this is an entirely different type of event. It weakens the decision-making capability of the acquired organization, puts limits on product development and creates an internal feeling of “the sky is falling”. It will take months, if not years, for these companies to completely sort through all of the internal issues and during this time, their products and their clients will be affected – whether it will be a positive effect or a negative effect, only time will tell.
Rather than wondering whether the sky is falling for Accruent customers it may be more telling to examine VEP’s (Vista Equity Partners’) strategy and history. Looking back to their buyout of SumTotal Systems Inc. in the HCM (Human Capital Mgt.) software market back in May of 2009, that firm is still operating, doing well, there has not been major turnover in staff nor a major scaleback/change in strategy. We would look for more of the same in the case of Accruent.
Such acquisitions are sometimes driven by a major shareholder (or group of them) who have been with the firm for several years, but then the market slows down and they become impatient for the return on their initial investment, choosing to take short-term acquisition dollars at some profit now rather than waiting for the market to come back in x years. This can be good for the acquired firm, because prior to the transaction investors can put financial pressures on a firm to throttle expenses to push profits (read: limiting software development and/or customer support expenses) that disappears with long-term investment on board.
Certainly customers can and should ask out loud what the go-forward strategy will be. But looking at other VEP acquisitions, things seem to be “business as usual” and possibly “full steam ahead”.
M&A activity is normal in a market where the first major round of investors that initially launched the firm are ready to retire and/or do something else with their equity. It also is normal as market software functionality matures and combinations of successful point-products makes great sense (e.g. Manhattan-Centerstone in 2006 in the IWMS market), producing a fuller product offering. So I do not believe panic is the watchword with this transition.
For the record, I have no interest in, am not associated with, and am not an investor, employee, partner nor customer of, either VEP or Accruent or SumTotal. But I have been involved in M&A activity in several software markets over the past 25 years both as a witness and a participating executive and investor (just not in the case under discussion). And I have direct experience in CRE-related software firms including CAFM/IWMS/CMMS markets.
I believe Vista Equity’s acquisition and consolidation of commercial real estate software applications is a good sign that the hard work all of us have done over the years is being recognized for the value it provides the end-user when procured, implemented and operated intelligently.
Whether Vista knows how to leverage and evolve their acquisitions competitively in our market remains to be seen.
For those of us now on the sidelines, it’s like watching competitive sports, though more like the Javelin Throw than Ultimate Fighting, as we watch the other industry competitors applying their best marketing skills to this event.
As always, over the course of time, it’s survival of the fittest – though luck sure helps.
Regardless of how it turns out, I wish you all a sucessful and prosperous 2010.
Andy Fuhrman
Having been a customer and an employee of both firms in the past and having seen capital sources enter this arena without the understanding of the business and its customers, I am not optimistic. Accruent has been a very well run company with great products, services, and fantastic Client base for some time. Much of MRI Software’s offerings are fast becoming legacy systems and the one asset, the deep and broad talent of the employees – is being routed. All “next generation” products are on hold or plans abandoned. So the product shelf life is rapidly declining, the talent of the employees is being lost, and the great Clients MRI has are being asked to sign long-term Support/U&E agreements. I can only point to the chapter with The SOFTA Group where similar events unfolded with similar factors and a one-time leading solution is essentially no longer.
The only way I see this becoming a positive is if the senior level talent at Accruent gets more engaged with MRI and places emphasis on new products that actually work for MRI Clients. It is quite naive to believe you can rebuild a company in this space without the required business expertise. If the plan is to increase revenue from existing Clients with no new viable offerings in the near future, MRI will be sold by Vista in 2+/- years. Good luck to everyone involved that any party leaves the experiment as a winner.
Dear Mr. Anderson,
thank you so much for your very good comment. I share the same thoughts/concerns. By ‘routing’ the talent existing in Accruent, MRI might be entering dangerous waters.
Yours Sincerely,
Steven