Reflections on the 4Projects acquisition

Having had a couple of days to research and reflect on yesterdays’s announcement of Viewpoint’s acquisition of 4Projects (post) and to discuss it with industry friends, I thought I’d try to sum up a few strands.

Deal background

While Viewpoint CEO Jay Haladay was somewhat coy about the the funding and terms of the deal it seems from the business and private equity press that it was backed by a Boston-based private equity firm TA Associates which invested $76 million for a minority stake in Coaxis Inc (which does business as Viewpoint Construction Software) in July 2012 (Portland Business Journal article). The investment was expected to help Viewpoint expand its product range through both internal development and acquisition; the two deals since then have added mobile and SaaS capabilities to the group, along with 11 and 61 employees respectively, making it around 390-strong.

Price-wise, most parties remain tight-lipped, though one of the UK private equity sites, Unquote.com, gave a ball-park figure of £25m-£50m (a range which neatly bookends my guess-timates). Taking the lowest of these figures, of that $76m cash pile (which was probably augmented by other reserves), Viewpoint will have spent over half, $39m, to acquire 4Projects from August Equity and its other shareholders.

Of course, the board of 4Projects Ltd has changed as a result of the deal. In addition to Steve Nelson, Jason Warde – now firmly based in the US – has stepped down as a director of the UK company; four new board members have been appointed, representing the new owners: Jay Haladay, Matt Harris, Jim Paulson and Benjamin Ertischek (respectively, CEO, SVP strategy and corporate development, COO and CFO at Viewpoint). All four are also on the 4Projects Holdings Ltd and 4Projects Management Ltd boards.

Branding and marketing

Initial reaction to the deal from UK-based competitors was muted. Asite CEO Tony Ryan did take to Twitter to say:

“Shame to see another UK name eventually disappear“

… to which 4Projects CTO Andy Ward quickly responded:

“Wishful thinking I’m afraid Tony. 4Projects name is going nowhere. Expect to see it everywhere 🙂“.

Certainly, there are no immediate plans to rename the business. When I talked to the Viewpoint team, they said they were taking a group-wide look at their product portfolio, but they recognised the 4Projects name has over a decade’s history behind it and is a familiar brand in several key markets (it also has a certain “does what it says on the tin” about it, being ‘for projects’).

While the immediate message was one of “business as usual,” I understand the intention is also to invest more heavily in 4Projects’ marketing than in recent years (the company disbanded its marketing team under Clare Watson in March 2011).

Tony Ryan’s suggestion that the 4Projects name would disappear is perhaps based on earlier examples of merger and acquisition activity in the UK SaaS collaboration field:

• The bullishly-marketed, but almost continuously troubled, BuildOnline initially survived several mergers but was eventually rebranded as CTSpace when it merged with Citadon in December 2006, though the product and company names survived a while longer
• CTSpace was subsequently bought by Sword in December 2007, who then sold it to Idox in November 2011, after which the CTSpace name disappeared in March 2012; the SaaS product is now part of Idox’s McLaren Software portfolio
• Also in March 2012, the BIW name was discontinued in favour of the German parent company’s Conject brand, following its acquisition 15 months earlier
• The company called Business Collaborator no longer exists, but its AEC SaaS collaboration product retains its name and is the mainstay of Unit4 Collaboration, an offering of the Holland-based Unit4 Business Software group (post).

UK collaboration: a success story?

Looking back at recent history of SaaS-based construction collaboration, it is clear that the UK market has spawned several successful businesses which ultimately proved attractive to overseas buyers (US, Germany, France, Holland). The somewhat fragmented and complex nature of British project delivery forced vendors to develop greater sophistication and configurability in their applications, and I think these characteristics have (a) helped adoption in non-UK markets and (b) proved attractive to would-be buyers looking to deploy the technologies in other regions and verticals.

Who’s left? Well, Asite, of course, and firms like Cadweb and Sarcophagus, though  – with lower traction – they will clearly not be as attractive as 4Projects.

Social media

Social media helped spread word of the acquisition. Of course, I blogged (the site recorded over 700 page views yesterday) and tweeted about it – and I saw over 70 other tweets and re-tweets about the deal in the 30 hours after it was announced. And it was good to see Jay Haladay (Update, 15 February 2013 – named Technology Executive of the Year by the Technology Association of Oregon) take to YouTube to give the CEO’s personal view: