CTSpace name to disappear

The latest change of ownership of CTSpace – whose software portfolio includes Software-as-a-Service and on-premise construction collaboration technologies – saw the company disposed of by Lyon, France-based Sword Group and acquired by IDOX last week (see IDOX acquires CTSpace for £11.6m cash).

Some reports suggest this will mean the disappearance of the CTSpace brand as it is integrated into IDOX subsidiary McLaren Software Group, and this was confirmed to me this morning by McLaren’s chief business development and marketing officer Tim Taylor. There will be a transitional stage during which “CTSpace: an IDOX company” is used before migration to the McLaren branding.

[Update (26 November 2011) – Rebranding of the existing CTSpace website has already started. It now sports new information about IDOX and a new logo.]

The financial logic

Glasgow, UK and Houston, Texas-based McLaren was itself acquired by IDOX just over a year ago (14 December 2010). As a 50-strong supplier of engineering document management and control applications to customers in the often highly-regulated oil and gas, mining, utilities, pharmaceuticals and transportation sectors, McLaren had revenues of £6.4m for the year ended 31 December 2009, and had achieved an operating profit of £0.377m. Occasionally negative newspaper reports suggest the business was struggling to break-even during the late 2000s, and revenues dropped in 2010 as the continuing global financial crisis took its toll (Tim stressed that the business also successfully attracted new investment despite the challenges). McLaren’s latest annual report reveals a 2010 turnover of £4.173m, generating a negative EBITDA of £1.1m and an operating loss of £2.2m (though a waiver of £4.8m loan notes as part of the acquisition by IDOX turned this into a profit after tax of £2.9m). Tim told me that McLaren had, however, been growing revenues at around 30% this year.

CTSpace generated revenues of £12.7m, which generated EBITDA of £1.7m and pre-tax profit of £1.3m for the year ended 31 December 2010; in 2009, it claimed around 90 staff. On paper, its integration with McLaren therefore creates an engineering management software business with combined revenues of around £17m, and well over 100 staff.

The ‘fit’

Both businesses operate predominantly in Europe and north America (though McLaren is also planning to start up in Australia and the Asia Pacific rim – update (6 December 2011): Michael Cawsey, ex-Metastorm, Kofax, Staffware, has been appointed as VP, Asia Pacific – news release). CTSpace will give the merged operation offices in London, Paris, Frankfurt and Dubai, and additional locations in the US (combining the two businesses’ Houston offices would seem a quick win).

McLaren is strong in process and other asset-intensive industries, while CTSpace has historically had a bigger profile in the architecture, engineering and construction (AEC) sectors.

McLaren’s Enterprise Engineer platforms appear to be delivered mainly as on-premise solutions, and the acquisition of CTSpace does potentially open up alternative deployment options. Originally a predominantly SaaS-driven business, CTSpace absorbed various non-SaaS businesses (including some specialising in tools such as SharePoint) while it was part of Sword, developing the capability to offer both SaaS (FusionLive) and on-premise (Fusion Enterprise) document management solutions – although, by some accounts (former MD Gert-Jan de Kieviet, for example), the on-premise offering was proving more attractive than the remotely hosted option. Over time, one might expect there to be some rationalisation of the on-premise product portfolio, with FusionLive promoted to those clients wanting a rapidly implemented, cross-company SaaS solution. This would continue the dual offering which CTSpace felt gave it a marketing edge (see my May 201o post CTSpace talks about FusionLive).

Sword Group sign off

What’s the story from Sword Group’s point of view? Well, they acquired a business in December 2007 for around US$13 million (c. £6.5m), and have disposed of it for £11.6m in cash. This might look like a clear £5m profit, but the CTSpace sold last week was a very different company to the pure SaaS business purchased nearly four years ago. As mentioned above, CTSpace has absorbed other businesses including ViaNovus (April 2008) and Cimage (March 2009), and Sword’s C2Share Sharepoint product. According to Sword’s statement about the deal:

“This disposal improves the net cash position of the group by €11M. The revenue trend of Sword CTSpace is c.€13M, this will impact the new pro forma revenue of the Group which will be in excess of c.€122M.”

According to Sword Group’s 2010 annual report, the main operating remnants of the former BuildOnline and Citadon businesses (BuildOnline Germany, Citadon Inc (US) and CTSpace France) generated revenues of €6.829m (c. £5.9m) in 2010. It’s not clear – to me, any way – what revenues came from the UK; in January 2011 “the business of CTSpace UK (assets and liabilities) was transferred by Sword UK to a new company set up for that purpose, namely CTSpace Ltd, which is a subsidiary of Sword Soft Ltd” (a company holding the group’s ‘product’ activities); CTSpace Ltd has yet to publish any financial accounts.

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2 pings

  1. […] company McLaren Software, ”the merger with CTSpace is now complete.” As described in November 2011, following the business’s acquisition from Sword (post), the CTSpace name was set to […]

  2. […] It highlights its introduction of a cloud-based solution – discussed in October 2011 with Gert-Jan de Kieviet, right, following his recruitment from Sword-CTSpace – and also mentions that David Parry, former CTO and co-founder of McLaren Software, has joined Cadac’s US organisation (McLaren and CTSpace are, of course, set to merge following the latter’s November 2011 acquisition by IDOX; post). […]

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