New era for Business Collaborator after MBO

SaaS construction collaboration pioneer Business Collaborator is set for a new lease of life as a £4m management buy-out changes its relationship with UNIT4 and promises a new push on BIM.

After years of working as a subsidiary of other businesses, the management team at Software-as-a-Service vendor Business Collaborator, led by MD Sanjeev Shah and largely funded by private equity firm YFM Equity Partners,* has finally taken the company independent.

BC: a brief history

Business Collaborator is one of UK construction collaboration’s oldest brands, having been commercially launched in the late 1990s, when the Reading, Berkshire, UK-based company was part of the software solutions arm of the Enviros environmental consulting and software group. It subsequently went through several changes of ownership and branding:

• In April 2003, BC was acquired from Enviros by CodaSciSys for £2.82m.
• In September 2006, CodaSciSys demerged, Business Collaborator becoming a specialist subsidiary of Coda plc.
• In January 2008, Coda plc was acquired by Unit 4 Agresso, a major provider of ERP solutions
• In February 2010, Unit 4 Agresso implemented a group-wide name change to UNIT4, and the BC business was rebranded as UNIT4 Collaboration Software Ltd, though the BC product name was retained.  Following June 2013 changes to the UNIT4 board, new CEO José Duarte apparently no longer held the same view of BC as his predecessors, opening the possibility of an MBO for this now non-core business.

Thus, in November 2014, the Business Collaborator company name is being resurrected. YFM is investing £3.35m into the £4m MBO (see YFM news release). Business Collaborator already powers what we will increasingly call ‘common data environments’ for the likes of Thames Water, Balfour Beatty and Costain and has over 160,000 users of its services.

BC targeting BIM for growth

According to Business Collaborator’s news release today, the business is planning to continue its developments in support for building information modelling (BIM) – a field it has been actively pursuing for some years.

At UNIT4 user conferences in 2012 and 2013, BIM was highlighted – by Stephen Crompton (CTO of the new BC business) – as as a key opportunity for the Unit4 Collaboration business and for customers of the wider Unit 4 group. In 2012, I heard UNIT4’s UK MD Anwen Robinson say UNIT4 had identified an opportunity to integrate the ERP-based processes involved in procuring built assets with project teams’ BIM-based collaboration processes through BC. The big picture for UNIT4 was (eventual) integration of ERP, collaboration and BIM in the cloud, already looking at what is sometimes termed in the UK ‘Level 3’ data management.

The BC management team returned to this theme at the 2013 conference. Users heard about a “massive focus on BIM” within Unit4, enabling a significant tie-in with UNIT4 ERP and financial applications, partly through the use of “linked data” and the adoption of semantic web principles to deliver asset information.

Product roadmap briefings this year reiterate these themes and forecast BC delivering all the requirements of a ‘Level 2′ common data environment in 2015, with BC used to securely manage and version-control ‘federated’ models, and manage workflows. This will put BC firmly alongside UK rival 4Projects which I saw demonstrate its federated model merging capabilities at Priority1’s user conference recently.

Unit4 relationship retained

As one might expect following a six-year association with UNIT4, the new BC business will retain some close links with its former parent. BC says:

“Business Collaborator Ltd will be a global partner of UNIT4.  UNIT4 will continue to use Business Collaborator both internally and with their partners and will continue to offer best in class integration with the Agresso Document Library.  Furthermore, Business Collaborator Ltd will exclusively provide the BIM platform for UNIT4 customers in the UK as part of this ongoing partnership.

Business Collaborator is hosted in UNIT4 Cloud – a robust and secure offering located at NGD in the United Kingdom.  The companies will continue to share an office in Reading.”

The two businesses also shared several common customers – in 2012, BC customers Halcrow, EC Harris, MVA and WSP were all using other UNIT4 solutions as well as its collaboration platform, while UNIT4’s AEC industry clients included Wessex Water, local authorities, retailers Debenhams, IKEA, Greggs, Monsoon and Selfridges, and developer Crest Nicholson (see post). I understand some overlap remains.

The MBO had been a long and drawn-out process absorbing a lot of management time, MD Sanjeev Shah told me. It had also delayed some project announcements – with the BC branding being resurrected, the company had not wanted to hold a further user conference under the UNIT4 banner. Instead, it will be investing more in sales and marketing to reinvigorate existing BC customer and end-user relationships, and to win new customers. He says:

“Business Collaborator is the right product at the right time for the construction industry which is now seeing a revival. With the UK Government insisting from 2016 that projects must use BIM, our business is at the forefront of this development and with YFM Equity Partners we can capitalise on this market demand.”

YFM and Eque2

Richard Beaton will join the business as chairman. Richard has successfully grown and sold a number of software businesses in the construction and other sectors, including Boldon James (sold to Qinetiq) and Tekton (sold to Sage). He is also currently chairman of Eque2, a leading ERP software company serving the construction sector, and with BIM “reinvigorating the existing collaboration software market” says “Business Collaborator is well placed to capitalise on this opportunity.” Giles Whitman, investment director at YFM Equity Partners, who led the deal said:

“YFM has a strong track record of working with market leading businesses in specialist areas that have transformational growth opportunities. With this experience, Richard’s credentials in the sector, and management’s strong track record, we are confident that Business Collaborator has an exciting future ahead of it.”

The chairman’s shared interests in Eque2 mean that BC now has two partners with strong interests in the ERP sector, one more general and one more focused on the construction sector.

Mid-market advisory firm Clearwater International advised BC on its sale. Partner Carl Houghton said:

“Whilst it has taken some time to mature, we are very bullish about the growth of quality BIM assets and we are delighted to help the team to carve out Business Collaborator from its corporate parent. We have seen a number of BIM related software businesses go for strong valuations recently and private equity interest in the sector is at an all time high.”

Clearwater advised BIM experts CSC World in four transactions including an exit to US giant Trimble in 2013, Eque2 in seven separate deals over a seven-year period, and Danish player Byggeweb (aka Docia) on its July 2014 sale to RIB Software AG.

My view

I had been initially concerned about first CodaSciSys and then UNIT4’s stewardship of the Business Collaborator business, as it seemed a poor ‘fit’ with the parents’ existing product portfolio. However, they continued to actively support research and development of the BC capabilities, particularly recently with respect to BIM, and the product retained strong loyalty from its customers, earning annual revenues of around £3m up to 2010 (as part of UNIT4 Business Software it then stopped reporting separately).

(A note: Once financial reporting resumes, recent BC revenues will not be strictly comparable with previous years’ performances. Sanj told me BC will focus on a SaaS subscription approach, believing it be a more sustainable and customer-friendly model showing greater predictability and transparency of future revenues.)

There is a precedent for MBOs at UK-based SaaS construction collaboration providers. In July 2007, 4Projects’ management team, supported by August Equity, bought the company from its previous owners for a undisclosed sum (later revealed to be around £21.6m). Two years later in September 2009, as the global financial crisis devastated its revenues, rival BIW Technologies was forced to recapitalise in a transaction worth around £3.8m, before eventually being acquired by Conject and rebranded.

The BC MBO is different. This is not a profit-maximising trade sale, nor is it a distress move. It is clearly an amicable deal between Unit4 and the management team (and its backers) designed to offload a non-core asset for a fair return while also helping the business move forward as an independent partner.

The deal also resurrects one of the key UK SaaS construction collaboration brands (BIW, Cadweb, Woobius, and BuildOnline [later CTSpace] are among the names to have already disappeared, while 4Projects is being progressively phased out in favour of Viewpoint – see post). During the mid-late 2000s, Business Collaborator was the ‘third force’ in UK collaboration behind BIW and 4Projects and ahead of Asite and others in revenue terms, but the brand’s visibility dwindled once it become ‘product-ised’ at UNIT4. With the MBO deal providing new funds for sales and marketing, Business Collaborator will hopefully become more familiar to potential customers and end-users, and in an increasingly BIM-focused market, BC’s BIM strategy will also heighten interest.

[* Disclosure: I was commissioned by YFM to join an advisory team undertaking ‘due diligence’ on the Business Collaborator technology offering.]