In only the latest consolidation move in the competitive construction-technology sector, Trimble announced April 23 that it is acquiring Viewpoint Construction Software for $1.2 billion from Bain Capital. The all-cash deal will be booked in the third quarter of 2018, and comes on the heels of Trimble’s $500 million acquisition of e-Builder in February.
“This acquisition really complements what we’re doing with e-Builder,” says Mark Sawyer, director of construction industry strategy for Trimble. “So e-Builder is on the owner side of project management, while Viewpoint is focused on the general contractor, MEP and civil contractor side. It’s quite complementary, and gives us a level of detail in the resource-management side of things that we have been pursuing.”
Viewpoint has focused in recent years on what it calls the Office, Team and Field approach, bringing project data from the jobsite into the cloud and then to the back-office software overseeing the job. Trimble has also pursued its own cloud-based collaboration solutions, but with more focus on field data and the design model. “When we got together with Trimble to discuss this, we saw great potential for synergy,” says Manolis Kotzabasakis, CEO of Viewpoint.
While the integration of Viewpoint’s software into the Trimble environment is still in the early stages, Kotzabasakis expects it will advance the company’s existing goals. “Trimble has real-time tracking of what’s happening in the field, and we can feed that into our system for new benefits,” he says.
Viewpoint brings with it about 8,000 customers, and manages roughly $400 billion in construction project value worldwide. Kotzabasakis says Viewpoint will operate as a business unit within Trimble, and there are no immediate plans to change how it manages its customers.
Trimble has been on a buying spree in recent years, picking up firms that let it address a wider scope of the construction-project life cycle. The company’s portfolio already includes Tekla, Vico, Prolog, SketchUp and many other construction software platforms. Viewpoint itself only recently completed its acquisitions of ERP software maker Dexter + Chaney and Keystyle, a firm focused on enhancements to Viewpoint’s Vista platform.
Many of these industry mergers and acquisitions are driven by legacy companies looking to strengthen their positions relative to new startups, says Jesse Devitte of industry investment firm Borealis Ventures. “The existing [construction technology] players have strong balance sheets and stock prices, but they’re playing catch-up. They see startups coming up and are making defensive moves,” he told ENR. “They can band together because they are legacy solutions with secure market positions, and hope their distribution networks are strong to deflect startups in the industry. But at the end of the day, the technology users will be the deciders, not the vendors.”
While an increase in consolidation among existing players in the construction software market can offer some integration benefits, there can also be costs to users down the road, according to Christian Burger of Burger Consulting Group. “If you look at the immaturity of the construction industry from the automation standpoint, everyone is eying this as huge potential windfall,” explains Burger, whose firm helps construction companies select ERPs and other software. “But the problem I see with private equity and publicly traded companies in this space is the pressure on short-term earnings, which will have an inflationary pressure on prices for these services.”
While Trimble and Viewpoint say they have no plans to adjust their pricing, Burger cautions firms to lock in competitive rates sooner rather than later. “I would recommend to these customers to negotiate. If you’re looking to subscribe for two or three years, don’t pay up front, but lock in a price-per-seat or something similar, because a few years out it’s bound to get more expensive.”