David Land, senior consultant, Cambashi, explores how merger & acquisition activity in the BIM software market is driving new innovations
The construction industry was already starting to experience disruption before the global pandemic. As the effects of the pandemic have unfolded, there has been a significant increase in corporate restructuring and merger and acquisition (M&A) activity.
BIM Design, which includes software used in the design of building and infrastructure projects, has been a well-developed space over many years. Now many of the BIM Design providers have expanded into the areas of BIM Construct – which covers software for collaboration on planning and building – and BIM Operate, which includes facilities management software, so they can offer a complete BIM lifecycle on their own, or via partnerships.
There has been a clear convergence between the software vendors within the BIM Construct and BIM Operate market areas, with partnerships and acquisitions enabling larger players to gain access across the entire BIM lifecycle.
So, what are the key trends? Who are the ‘movers and shakers’ in the BIM software market?
Autodesk is certainly the biggest Design player and has been building up the BIM Construct sector over the last several years. Obviously, the bigger players want to dominate as much as they can organically and acquire other providers to enable them to go into new technologies, or take new approaches, or acquire customers to fill the gaps where they need to.
Autodesk is showing interest in completing its full BIM Lifecycle from Design-Build-Operation after a large acquisition run, building up its Construct products, acquiring PlanGrid, Assemble Systems, and BuildingConnected (for around $850million, undisclosed and $275million respectively).
In January 2022 Autodesk added ProEst, a cloud-based estimating solution that enables construction companies to create estimates, perform digital take-offs, generate reports and proposals and manage bid-day processes.
It has also increased its coverage in civil engineering within the water infrastructure market by acquiring Innovyze for approx. $1billion in 2021 to help position itself as one of the leading global providers of end-to-end digital solutions and to accelerate its digital twin strategy.
Another key market player Nemetschek acquired MCS Solutions and Axxerion to create Spacewell, a brand designated to focus on the BIM Operate Market and complement its BIM Construct Brands, such as Nervaris and Solibri. Nemetschek has also continued to build strength in BIM due to ongoing digitalisation of construction and a more mixed outlook for ‘Manage’ software. The company showed TAM (total addressable market) share and penetration, estimated based on Cambashi BIM data.
At the brand level, FRILO Software successfully completed the acquisition of the software company DC-Software Doster & Christmann in April 2022. This acquisition will help FRILO to strategically expand its product portfolio in the foundation engineering segment.
Large BIM Operate players such as MRI have also been on an acquisition spree, hoovering up many of the smaller BIM Operate vendors to create one of the largest portfolios in the sector. This includes buying assets from other BIM providers such as Trimble (e.g. Manhattan), which is moving out of this area to focus on its core Connected Construction capabilities within the BIM Construction area.
MRI recently signed a partnership with Procore Technologies, a BIM Construct provider which went through an IPO this year and is performing well. This partnership will help both companies offer a wider portfolio, connecting project management and accounting with adjacent software sets that can be used in different parts of the BIM workflow.
Archibus (now Space IQ) also went on a buying spree, acquiring SpaceIQ, Serraview and iOFFICE, the latter having recently received an investment from Autodesk. We anticipate a closer alignment between these companies’ portfolios in the future.
Other recent acquisitions include:
- Fortive Corporation acquired ServiceChannel, a leading global provider of SaaS-based multi-site facilities maintenance service solutions
- Procore Technologies acquired Levelset to add lien rights management to the Procore platform, enabling it to manage complex compliance workflows and improve payment processes in construction
- Hilti Corporation acquired Fieldwire for approx. $300 million
- Thinkproject acquired Kairnial Group to further accelerate the digitalisation of the construction sector to deliver more sustainable, punctual and cost-efficient projects.
So, where are the BIM sweet spots?
Some of the larger BIM players are interested in venture capitalisation right now, where they can take a stake in start-ups. For example, Trimble and Nemechek have invested hundreds of million dollars in such companies.
In December 2021, Nemetschek led a financing round for Imerso AS, a Norwegian-based deep-tech company offering a next-generation platform to automate construction quality monitoring.
In August 2021, Trimble created Trimble Ventures, a venture fund focused on investing in early and growth-stage innovative companies, aligning with Trimble’s mission of transforming work in the agriculture, construction, geospatial and transportation industries. The fund launched with $200 million allocated for investments and a focus on companies with the potential for technology disruption.
Schneider has been buying quite a decent sized share of some companies, but not a controlling share, that have now been included under its new Energy Management division.
It will also be interesting to see whether Siemens plans to do anything further with its investment in Bentley. It acquired EcoDomus in a move will help Siemens Smart Infrastructure expand its digital building portfolio, including its cloud-based building operations twin software and its flagship building management platform, Desigo CC.
Since its IPO, Bentley has acquired many companies across different areas of AEC & BIM. Acquisitions like Seequent, Powerline Systems and Adina have seen Bentley grow its coverage across civil/geophysical engineering, plant/power and infrastructure engineering simulation.
Overall, it is interesting to look at the investor relations output from some of the larger players and how they are looking to acquire technologies that previously were missing from their portfolios. They seem to be attempting to create a start-up profile, spanning technologies or companies that they know will help them create a larger platform in the future.
The key questions are: is this frenetic M&A activity likely to plateau? And what will the next five years look like for the BIM software market?
At Cambashi, we think this activity is going to continue, at least for the foreseeable future. In terms of the larger BIM players, there will probably be one or two ‘mega’ mergers at some point, but for the moment the trend is still very much about companies plugging gaps with new technology.
As in most industries, the acquisition of technology solutions is an inevitable driver of M&A activity in the building and maintenance industry, mainly because technology provides differentiation for companies operating in this exciting sector.