Descartes, Airclic, Siemens, Camstar. Bigger deals reflect stronger economy in the US market.
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And more deals. Why? Three major reasons. Number One: The market is awash with already-written code. It is amazing how much decent software is out there. Need new functionality? Why write code from scratch when you can buy and integrate? Two: Customer acquisitions probably are tops for some companies. Want to enter a new market? Why not just buy a company that is already there? These approaches speed up time to market as well as add expertise to the organization. And, Three: It’s hard to hire talent. Fresh recruits might take years to train and trust with sophisticated customers. Acquisition also brings depth of expertise to the firm.
Here are two examples of deals that occurred within the last month that meet the three criteria above.
Manufacturing—Siemens’ Acquisition of Camstar
Siemens hosted a quasi-surprise conference call with the analysts recently to announce the deal with Camstar. Siemens declined to provide the financial details, though. In the short term, Camstar will still operate as its own brand until ideas settle in on the best path forward.
Why This Deal?
Of late, Siemens has been investing more in the manufacturing space as they brought together all the manufacturing/product-centric software under one umbrella. Their message and direction is ideation, realization, utilization i.e., PLM to Manufacturing Execution Systems (MES) to service.1 So the Camstar acquisition makes sense to fill out their realization portfolio.
Camstar has been a steadily growing company in a tough market sector—MES. Sold in over 18 countries, it has gained a steady foothold in the global manufacturing space. Hence, it fits the Siemens profile of global presence. In addition, Camstar focused on electronics/discrete and medical devices—all target areas for Siemens. Siemens’ SIMATIC IT and its older acquisition of Index, with their XHQ solution, gave them demonstrable strength in the process industries. With Camstar, Siemens now has market strength across all the most populated industries.
A few years back, no one would touch MES as far as investment goes, but with the resurgence of manufacturing focus in the US, there is a fresh market for fresh ideas. Key here is the broader integrated footprint with a manufacturing focus. Supply Chain applications providers have been ‘platforming away’ for a decade. Manufacturing thought in terms of enterprise—on premise—software. However today, with so much virtualization of the business model as well as centers of expertise within an enterprise, the need for a manufacturing platform integrated in the cloud with components that are simpatico is critical. This trend is particularly strong in discrete/component manufacturing areas, with the growth of the medical device market and the growing role of distribution and service providers within the channels.
On the Road…Transportation
Last week Descartes acquired Airclic Inc. (“Airclic”), a long term cloud/mobile solutions provider. This looks like a new and positive home for Airclic, who has had a few acquisitions, investment cycles and acquisitions of their own over the years, to finally bring together a cohesive and competitive solution. This was a ~$29M deal, which is a sizable investment on Descartes’ part.
Why This Deal?
This is an interesting addition for Descartes, who is continuing to assert their status in the transportation market. Airclic operated in a somewhat parallel universe to Descartes. Both companies have been focused on last mile logistics—Descartes more in retail and Airclic more in industrial markets, and in markets such as healthcare where Descartes may not have roamed before.
In addition, Descartes’ real focus has been on software for transportation—route planning, logistics information communications with their GLN2 and optimization; whereas Airclic’s domain has been more on the mobile side, with device integration, electronic proof of delivery, and so on. Both companies have 3PL customers in common, plenty of new accounts to pursue, as well as new growth opportunities ahead.
From large carriers to the owner/operator, the trucking industry has gone mobile and their requirements for cloud applications to support both tactical delivery execution and overall fleet/freight management are required. Both B2B and B2C businesses are focused on last mile excellence.
Conclusion—Are We Done Yet?
Not by a long shot. To be honest, every week when we have conversations with buyers, sellers, and investors who are musing and seeking their next investment, I am amazed, considering that we don’t hear more deal velocity. Stay tuned, though, there will be more interesting deals on the horizon.