I've read several reports about this, and it appears to be quite different from a merger/acquisition. The equity fund owns both firms, but there is no operational management structure atop the two. This diginomica analysis makes a lot of sense to me.
I think Acumatica had 3 problems that this will or could fix.
1) Russian investors. This was at best an awkward fact, and Acumatica handled it as best it could by being upfront about it. But in today's geopolitical and American political world, this liability would only grow. The equity fund cashed out all of the original investors.
2) Global expansion. Acumatica is keen to grow beyond America. But international expansion is very expensive and slow to build from the ground up. IFS has significant assets in Europe and Asia, which Acumatica could realistically use as a foothold there. Oracle's buying Netsuite goosed its international growth rate, and synergy with IFS's global footprint could have a similar effect for Acumatica.
3) Capital. Subscription-based software consumes cash. I'm going to guess that Acumatica was nearing a point of requiring another round. It is too small to go through an IPO, and that could also put a target on its back for acquisition. This apparently solves the problem, as the equity firm is investing more into Acumatica, not just buying out the original owners.
The target markets for the two products are quite complementary: SMB vs enterprise. There is apparently little interest by IFS in moving downstream, so it shouldn't be hard for Acumatica to maintain its sales model. IFS is trying to move to the cloud more quickly than it has, and this arrangement gives it access to Acumatica's; that's a big deal for IFS.
This deal is not structured anything like Sage buying up Intacct or some other firm which it then runs into the ground while starving it growth capital it needs. But as diginomica says a couple times: execution matters. We'll see.
https://diginomica.com/coming-together-erp-firms-acumatica-and-ifs-early-analysis------------------------------
Jerry Norman
Smartbridge Partners
Austin TX
512.419.1444 x112
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Original Message:
Sent: 06-19-2019 22:10
From: John Hoyt
Subject: Acumatica Acquired By Private Equity firm EQT Partners
They can spin it whatever way they want. We knew at some point Roskill and others wanted to get cash out of this while they could, so this was a good opportunity to do that.
I agree with @Jeff Schwenk - Good luck!
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John Hoyt
Forming Solutions: john.hoyt@formingsolutions.com
Next Level Manufacturing Consulting Group: johnh@nextlevelMCG.com
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Original Message:
Sent: 06-19-2019 15:23
From: Wayne Schulz
Subject: Acumatica Acquired By Private Equity firm EQT Partners
This is one of the better analysis I've seen. It appears most of the article was based on an interview and not just a rewrite of a press release.
https://www.enterprisetimes.co.uk/2019/06/19/eqt-marries-acumatica-to-ifs/
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Wayne Schulz - Schulz Consulting - 860-516-8990
Original Message:
Sent: 06-19-2019 14:56
From: Shawn Slavin
Subject: Acumatica Acquired By Private Equity firm EQT Partners
Jef, that was my immediate reaction; 'but it worked so well for XXXX (pick your product)'. Sage 100, Sage 300, PFW, Sage 500, Dac Easy, Business Works, Sage Abra, Sage Allocations, Sage Budgeting).'
My hope is that the two products will be complementary, not competitive and the obvious parallels with Sage will be purely coincidental. Acumaticas technology is fresh and current. It's channel is growing and invested.
Time will only tell.
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Shawn Slavin
CS3 Technology
Original Message:
Sent: 06-19-2019 12:28
From: Jeff Schwenk
Subject: Acumatica Acquired By Private Equity firm EQT Partners
A UK company equity company.
Good luck!!!
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Jeff Schwenk
FORMER 90M Board Member
Bottomline Software, Inc.
Waynesboro VA
540-221-4444