A private equity firm has entered into a merger agreement; the deal is the latest in a trend toward building a service life cycle management suite, according to one analyst.
Posted Oct 24, 2006
Yet another public software company is on its way to becoming a private entity. Service delivery management (SDM) specialist Indus International revealed Monday that will be acquired by private equity firm Vista Equity Partners in an all-cash deal valued at about $240 million. After the transaction is completed Vista plans to combine Indus with MDSI, a provider of enterprise mobile workforce management (MWM) solutions and a portfolio company of Vista Equity Partners.
The transaction is expected to combine the companies' enterprise asset management, field service management, and customer management solutions to deliver a more comprehensive SDM offering. The deal, subject to customary closing conditions, is expected to close within the next 90 days. Indus stockholders will receive $3.85 in cash for each share of Indus stock, according to the company.
"In today's software market going private offers significant benefits, including providing a longer range investment horizon, offering the ability to make longer range operational decisions," says Greg Dukat, president and CEO of Indus. "Furthermore, it would improve the client experience by providing improved service and expertise, quality solutions to meet market needs, access to capital for strategic investments, and focused expertise, from both an operational and investment standpoint."
"Last quarter [Indus] missed Wall Street's expectations," says Eric Karofsky, senior research analyst at AMR Research. "A pretty significant trend that we are seeing with small public companies is they're going private, so it shields them from public scrutiny...and it also provides access to capital."
"Following the close of the transaction, as the new company merges organizations and processes we will leverage the combined capabilities of both companies to create an even better client experience," Dukat says. "Above all," he adds, "We are committed to protecting our clients' investments."
Indus's solutions portfolio features integrated asset and work management tools, customer information systems, and field service solutions. Its customer base comprises more than 300 companies in more than 40 countries in various industries, such as consumer packaged goods, education, facilities and property management, government, high tech, manufacturing, telecommunications, transportation, and utilities. The combined entity's client roster includes five of the top 10 cable companies and 18 of the top 20 utility companies in North America, according to Dukat. MDSI plays in the enterprise MWM space with solutions like Advantex, which features scheduling and workflow capabilities. MDSI's customer base includes about 100 customers, including 80 percent of the top 10 North American utilities and half of the top 10 North American cable companies, according to MDSI. "Together we will provide our clients with a broader solution suite to fully optimize their service delivery processes," Vince Burkett, president and CEO of MDSI, said in a statement.
AMR's Karofsky notes that both companies are very strong in the utilities vertical, but the perception is that they're utility service providers. Both have been branching out to other verticals, but they need to "get out some good messaging and solutions on how they're going to attack the rest of the industries," he says.
Overall, Karofsky sees the transaction as a good fit. "What we've been seeing is a consolidation across all aftermarket services," he says. "One of the reasons for that is some very strong niche players--these two being two of them--are coming together, and they're starting to battle against--and effectively battle--against the SAPs, Oracles, IFSs, and Lawsons of the world." Aside from enterprise application providers, some of the other companies that play in this space include service life cycle management suite providers like Astea International, ClickSoftware, Metrix, and Servigistics, according to Karofsky. Still, with this deal, he says, "you're seeing two very strong players team up together."
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