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Article
Another ERP Joins the Private Equity Ranks

Enterprise software, at the end of the day, is fueled by investment money--public or private. Deals flow. But are these a good deal for customers?


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The latest ERP to ‘take the money’ will be UNIT4. Announced on November 18th, Advent International has offered to buy this public company for a 32% premium over its October share price of €1,279.

It is fascinating to note the behind-the-scenes tech-market money flow. Most investors today (although having the private equity moniker), are interested in investing in companies, not just scalping assets. According to UNIT4 founder, Chris Ouwinga, “…We have carefully looked at all our strategic options and believe the proposed transaction is in the best interest of all our stakeholders. Although our ownership structure in itself is not a goal, being owned by Advent does bring benefits. It not only brings the certainty and commitment of funding for the coming years, but Advent also brings expertise, knowledge and experience that will be valuable in the pursuit of our strategy….”

So the expectation is that additional investments will be made in the company. And UNIT4 has been on a journey to recast the company as a cloud-only solution. Solid investment has generally been the story in tech deals over the years, restoring companies to health.

ERP Investment Story

Software Firm

Investor(s)

Comments/Major Products

Aptean

Vista

Ross, CDC; Consona, MadetoManage, IMI, Catalyst WMS, TradeBeam GTM solution  and many other important assets

Epicor

Apax

Activant and Epicor ERP, Prophet 21, IVP for Automotive, many CRM, service management, and industry-specific ERPs—more products here.

Infor

Golden Gate Capital
and Summit Partners

Products carrying the Infor brand were previously known as Ask, Baan, Lawson, Adage, SSA, SyteLine and many other software products for supply chain, asset management, PLM/product design. Infor has made major investments in mobile, UI and modernization of the portfolio.

Kenandy

Various VCs

Multi-rounds of VC investments started with Marc Benioff’s encouragement and Salesforce.com as an original investor. A subsequent investment round (Series A) included Kleiner Perkins Caufield & Byers, salesforce.com and Wilson Sonsini Goodrich & Rosati in 2012. 2013 saw another round of investment (Series B) led by Lightspeed Venture Partners with the participation of existing series A partners. Kenandy is one of the newest ERP players—two years old in September 2013.

Plex Systems

Francisco Partners
Accel Partners

Francisco Partners. Plex’s build-out and growth since Francisco and others acquired the company has been impressive. Accel Partners added additional investment in Q4 of 2012. Will we see an IPO in the future?

HarrisData

William G. Nelson

Serial entrepreneur and private investor in companies such as Carbonite, Pilot, and Pansophic Systems. Mr. Nelson purchased HarrisData in 1990.

UNIT4

tbd

The Advent International offer is expected to go through in Q1.  Advent has some history with the tech market—investing and exiting in companies such as Aspen Tech and Red Prairie (now merged with JDA).

Source: ChainLink Research

New ownership can breathe new life into companies that are struggling on their own. Customers may benefit from the knowledge and expertise that comes from richer portfolios. Of course, customers do have to buy in to the continuing service contracts or may need to buy upgrades outright. In spite of the disruption that might cause, these upgrades are generally a good thing. Clunky software can be replaced by systems that are ultimately cheaper to support and provide cloud’s advantages, mobile, a better database, and more functionality.  

Most of the new owners have taken a conservative approach to the upgrade path, as Epicor CEO Pervez Qureshi has stated to customers. Development dollars and new expertise have been extensive. And the companies have ambitious plans and budgets to continue these make-overs. But they have not forced old customers to move, vowing to take care of them through the years. In general, this all has been a good story for customers.

Still, one has to marvel at the entrepreneurial spirit that created all these companies in the first place and also managed to sell quite a bit of software to many companies. And remembering that many of the current companies had previous lives, with investments of various stripes and revenue from paying customers, one has to ask if the ERP market, saturated with so many offerings can get a return for all the money being poured into it—again?

References:

ERP Now!


To view other articles from this issue of the brief, click here.




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