BIW, the UK market leader in SaaS construction collaboration, has been acquired by German FM software specialist Conject in a VC-backed deal, creating two complementary sister companies under a joint board.
In a landmark deal between two of Europe’s leading vendors of built environment-related Software-as-a-Service (SaaS), UK-based construction collaboration technology provider BIW Technologies* has been acquired by Munich-based real estate life-cycle management SaaS business Conject. The news was reported in Germany by Immobilien Zeitung on Monday – apparently somewhat prematurely as both businesses were planning a coordinated release of the news for the end of this week. The deal value remains confidential.
BIW, which has long dominated the UK market and has overseas operations in the Middle East and north America plus a software development hub in India, will now be part of a group with combined revenues of around €18m per annum (in 2008, Conject achieved revenues of €11.5m [£10.3m] and generated a profit of €2.1m [£1.9m]; BIW, in the year to 30 September 2008, turned over £7.3m, dropping to £5.9m a year later; post). The group will have some 180 employees, and Conject CEO Martin Reents is apparently aiming for the group to achieve 20% future revenue growth, encouraged by the German company’s continued growth within the resilient German economy.
As major players in their respective domestic markets for some years, the two companies have had occasional senior level contact since the early 2000s (it perhaps helped that until 2004 one of BIW’s early backers was a German bank, WestLB), but following BIW’s £3.8m recapitalisation in September 2009 (post), the two SaaS businesses resumed conversations earlier this year and a deal was finally cemented on Friday 10 December.
BIW CEO Colin Smith told me me the deal has been backed by existing Conject investors, EarlyBird Venture Capital and France-based VC company Seventure. The BIW shareholding held by the NovaVest Fund I (which took over the WestLB investment), managed by Tempo Capital Partners, has been bought out. The main BIW director shareholders – Colin, finance director Bill Flind and sales director Steve Cooper – are now shareholders in a newly-formed holding company, Conject Holdings Gmbh, where they also sit on a management board overseeing the affairs of both companies. BIW Technologies Ltd is now a 100%-owned subsidiary of Conject Holdings Gmbh, as is Conject AG. Both BIW and Conject will retain their existing identity and management (Martin Reents will now have a seat on the BIW board; he and Colin Smith also share the title ‘co-CEO’ of the Conject group), and continue to market their existing products and services.
There is a good strategic ‘fit’ between the two businesses. Conject (a business I profiled last November) has a dominant position in markets in mainland Europe, and has established outposts in other markets, but has struggled to establish itself in key English-speaking markets, some where BIW has also established operations. Thirteen months ago, Conject told me that it wasn’t “planning to enter the UK organically”, but the BIW acquisition gives it one of the UK’s market leaders, and a customer base including some of the UK’s best known construction industry clients, contractors and consultants. While BIW has had ambitions to enter markets in mainland Europe, it was – as Colin confirmed – unlikely to gain a foothold in Germany and other central European countries unless it signed some kind of deal with an incumbent provider.
Moreover, while BIW has long supported the idea of design and construction information being re-used by facilities managers for operation and maintenance purposes, it is still mainly used as a project delivery and control platform, developing considerable expertise beyond document collaboration to include support for key construction project processes, from tendering, through contract management to project financial control. Conject, by contrast, has worked on positioning itself more as a provider of infrastructure life-cycle management (ILM), helping customers document and manage their built asset portfolios after project delivery; it does have a construction collaboration application but it is less sophisticated than BIW’s platform. With ‘whole life cost’, in both cash and carbon terms, being discussed again within the UK construction industry (I have seen the 1:5:200 model debated again at recent Constructing Excellence events, for example), a more holistic, cradle-to-grave approach to management of built assets could well be timely.
An €18m combined annual turnover (that’s around £15m or US$23m) will also help the group win business from corporations whose risk policies make them hesitant about dealing with businesses historically generating apparently low revenues (despite the visibility of order book and predictability of future revenues that comes with the SaaS subscription model). Of the pure-play SaaS construction technology vendors, only Aconex has comparable revenues (it achieved revenues of £18m in the year to 30 June 2009; post).
Conject has previously acquired other software businesses in the real estate and facilities management sector. Other acquisitions include project cost management business APSIS Software (acquired in 2002), BuiSy (2003), and Frankfurt-based computer-aided FM vendor Kopernikus (2006), all subsequently rebranded as Conject applications. This deal differs insofar as creates two sister companies under a joint management team, which will look to further develop the complementary nature of the two businesses’ markets, product/service strategies and resources.
The timing of the deal probably explains why BIW has not been capitalising upon its newly-won NEC Licensed Content Provider status, announced on Tuesday (post).
Update (17 December 2010): BIW has now issued a news release about the deal. There isn’t really anything new in the release, though both CEOs enthuse about the synergies created:
Colin Smith, BIW CEO, touches on the ‘reliability’ theme of recent PR output (post), saying:
“BIW has been expanding into new international markets over the last few years, and joining forces with conject will help us to build on that growth for the benefit of our customers. In these challenging economic times, clients look for suppliers who are financially secure, have a robust business model and global reach – and we can now offer them exactly that.”
Conject CEO Martin Reents says:
“conject and BIW share the same vision and approach to innovation and customer service. We recognised the quality and value of BIW’s applications, which are wholly complementary to our own ILM portfolio, and we are very excited to be able to extend and complete our suite. Many of our customers are world leaders in their fields, and have increasingly global and complex needs. Together, conject and BIW can offer them a service that meets these needs.”
[* Disclosure: I was an employee of BIW Technologies Ltd from 2000 to May 2009.]