This week on Software PE Pulse we are going deep on a specific sector – in this case, construction tech. This isn’t meant as a comprehensive list, but rather a focused analysis on a few key deals. Here are five transactions that have happened (in just the past three months) and what we can learn from them.
ComSense / Advantive (Sep 2024)
Category: construction supplier software
ComSense is an ERP software system for the architectural door, frame, and hardware distribution industry. Their software covers all of the core back office tasks for these kinds of businesses. Given the complexity of the software, it’s likely they serve some of the larger distributors in the space. A few examples of things their software helps with:
- Estimating: preparing bids and proposals, along with projecting costs of materials, labor and resources for a project to ensure it’s profitable.
- Project management: overseeing the lifecycle of a project. This could include tracking material orders, managing the various timelines, coordinating with manufacturers and suppliers, handling change orders (changes to a project’s cost/scope), and ensuring / reporting on compliance.
- Accounting: financial tasks such as invoicing, billing, expense tracking, and cost management.
- Materials pricing: ComSense maintains an electronic price book, which is functionally a database of pricing information for products from over 120 manufacturers.
ComSense was bought by Advantive. Advantive was originally created by private equity funds TA Associates and ST6 Partners (a small fund based out of Houston created by a former Hg Capital portfolio company CEO) as a platform to buy and grow software businesses focused on specialty manufacturing and distribution. Advantive took further capital from Ottawa Avenue Private Capital and Insight Partners in 2023.
Since they were created, Advantive has made 10 acquisitions (according to PitchBook) of ERP software businesses in end markets ranging from food processing (ParityFactory) to packaging (Abaca Systems) and everything in between. Advantive has a significant presence in both the EU and North America, and ComSense is based in Toronto, Canada.
PMWeb / Bregal Sagemount (Sep 2024)
Category: construction project management software
PMWeb is a construction project management software platform. They claim to serve Fortune 500-size customers and provide a modular project management software across the entire plan, build and operate lifecycle of a building. This includes planning, estimating, cost controls, document controls, scheduling, and asset management tools.
PMWeb has a number of integrations with ERP and accounting systems that are core to capital project management and seem to differentiate with their simplicity, modularity, reporting/visual analytics and ease-of-use. PMWeb doesn’t touch deeper parts of the construction process like labor / field service management, design and modeling (BIM), or site-specific engineering work, where folks like Procore and Autodesk have stronger solutions (though they also compete with Procore directly on the project management layer).
There isn’t much information on this deal publicly (no press release or anything), but it does show up as a deal in Pitchbook. Bregal Sagemount has various funds and is known to either take a minority, majority or 100% stake of businesses in various sectors (including software). PMWeb had around 40 employees on LinkedIn at the time of the deal.
FleetWatcher / Align Technologies (Aug 2024)
Category: construction telematics
FleetWatcher provides integrated hardware and software to help construction companies optimize and manage their fleet of heavy equipment. They focus mostly on the civil construction market with their solutions being used in projects for road construction, infrastructure development, earthmoving, and materials transportation.
With large construction projects (think building a new road), one of the biggest expenses is the heavy equipment needed to complete the project (bulldozers, cranes, graders, pavers, etc.). FleetWatcher would install various GPS and other tracking devices on this equipment, and then they could track the equipment’s idle time, fuel consumption, productivity and operating hours in real-time. By looking at this data, companies can figure out when to reassign or shut down equipment. They can also proactively track maintenance. All of these things maximize usage and minimize downtime for one of the most expensive parts of their budget.
A number of the large construction software companies have a fleet management component. Trimble, for example, has what looks to be a similar solution. HCSS, a Thoma Bravo-backed software company focused on civil construction, has some tools in this space as well. Teletrac Navman and Samsara also have offerings.
FleetWatcher was bought by Align Technologies. Align Technologies also provides construction management software, but with a focus on tool and equipment tracking, safety and compliance (EHS management), and crew time tracking (not as much project management or BIM). Align serves a broader customer base (general, electrical, mechanical, and specialty contractors) while FleetWatcher focuses on civil construction companies. Align is owned by private equity fund The Riverside Company, who purchased them in 2021, and they’ve made two other acquisitions besides FleetWatcher in the past few years.
Marcotte Systems / Command Alkon (Jul 2024)
Category: construction supplier software
Marcotte System is a software company that serves the concrete production and delivery industry. They have tools that help with the concrete manufacturing process (called “batch production automation”), dispatch / fleet management (helping these companies optimize and dispatch trucks full of concrete and concrete products to construction sites), and business intelligence (dashboards on everything from production performance to maintenance on equipment).
Marcotte Systems’ customers are various kinds of concrete production companies. These companies might produce ready-mix concrete (the liquid concrete you see in those trucks with the large, rotating containers on the back), precast components (concrete components that are cast and cured in a controlled factory environment instead of onsite) or other kinds of concrete products. Concrete is critical for many large-scale construction projects like road development and high-rise construction, and rank near the top of largest budget items along with labor and steel costs.
Command Alkon, meanwhile, is a broader platform both in its customer base and product capabilities. It focused on providing software for all kinds of construction materials, including concrete, asphalt, aggregates, and cement. In addition to comparable production automation, dispatch and BI tools, they have additional capabilities deeper in the supply chain (materials/inventory management, order tracking) as well as ERP and accounting tools.
Command Alkon is owned by Thoma Bravo and Heidelberg Materials (a large German building materials manufacturer). Thoma bought Command Alkon in 2020, and then in Sep 2021, they sold 45% of the business to Heidelberg at an estimated $1.7B valuation. Command Alkon has been owned by private equity since 2006 and historically has completed over a dozen acquisitions, though the Marcotte deal is the first they’ve completed since 2020.
Revizto / Summit Partners (Jul 2024)
Category: building information modeling (BIM) software
Revizto is a software company that provides a collaboration layer in the building information modeling (BIM) software stack. They don’t provide the core modeling software themselves, but rather integrate with a number of BIM software modeling tools (both 2D and 3D) and make it really easy for a wide variety of end users to collaborate and communicate.
Stepping back, BIM software is the modeling software that various professionals use in connection with construction projects. It typically includes tools to model 2D and 3D designs and to visualize, simulate and collaborate across groups during a construction project. These tools often pull in data across many disciplines (not only how the building looks, but how the electrical, mechanical and structural elements fit together). Autodesk is the big player in the BIM space and has >100 tools serving various building modeling use cases.
One of the core use cases for Revizto is issue tracking: identifying, documenting, and resolving conflicts that arise during the construction project. As an example, a “clash” might be detected between the HVAC system and the structural beams in the middle of a project. This would be logged and tracked in Revizto, and would then allow a mechanical engineer (HVAC) and a civil engineer (structural) to collaborate alongside the architect to resolve the issue and get the project back on track.
Issue tracking isn’t the only advantage for Revizto though. A few other cool use cases:
- Revizto integrates with both 2D and 3D models and puts them side by side. 2D models (like floor plans and sections) are often used for initial design, while 3D models provide more detailed, spatial views for construction, and having access to both makes collaboration a lot easier.
- Revizto is available on all devices and uses AR (for real-time comparisons of 3D models with what’s actually installed) and QR code generation (to create an issue, print out a QR code and place it on a physical object) in unique ways.
Autodesk and others have some tools that compete (Navisworks is an Autodesk issue tracking product, for example) but they don’t have nearly as many features or integrations as Revizto, nor are they as easy to use. And this makes sense: collaboration is more of an afterthought for Autodesk, who has extremely complex modeling software to build and maintain.
Summit Partners invested a minority share in the company. Summit is a multi-strategy investment fund founded in 1984 that has $42B in AUM. They invest primarily in technology, healthcare and related sectors.
