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PLM Software Update

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Over the next months I will endeavor to provide you with some insight into what is happening in the software industry at large from a mergers and acquisitions perspective, why it is happening, and what it means to the software market and those planning for a transaction.

In an early 2012 Mirus Viewpoint article, my colleague Peter Alternative and I talked about the unique window of opportunity for mergers and acquisitions, specifically in the PLM micro-chasm. We discussed how the hugely competitive oligopolies were vying for dominance and how major shifts in technology were providing a glimpse into areas for consolidation and an opportunity for growth and differentiation. We highlighted social media, cloud computing, and industry-specific applications as technologies to watch.

Now as we approach the end of 2013, we find that indeed, not only has the pace of acquisition been maintained but in some cases accelerated, as complementing organic growth with growth through acquisition and the search for product differentiation becomes a key strategy in the battle for dominance.

In our recent white paper is a quick analysis of the volume of transactions of several major PLM companies over the past 12 months and 3 years respectively, along with approximate compound annual growth rates during that time frame.

12 month acqusitions

Mirus has found that the major force driving many of these acquisitions is the “winner takes all” game for PLM and CAD seats that is currently being played out at numerous major accounts. In fact, this high-stakes scenario has manifested itself in a battle for new technologies in the hope of differentiation and sustained price per seat.

In this context, it has become common for complementary applications to become pawns in this battle for supremacy ($100M deals are not uncommon) if they are perceived as strategic to the PLM customers’ future direction.

Interested in what domains these companies are making acquisitions in? Will the trend continue? And, does this phenomenon correlate to other segments of the software industry? Stay tuned and the answers to these and other relevant questions will present themselves in future posts.