WorkWave shifts acquisition focus from technology to market consolidation – CEO

Provided exclusively by Mergermarket, an Acuris Company

WorkWave, a provider of cloud-based field service and fleet management software, seeks acquisitions of smaller players after rounding out its solution set, said President and CEO Chris Sullens.

Holmdel, New Jersey-based WorkWave, which has been majority-owned by Chicago Growth Partners (CGP) since August 2012, has made several acquisitions to add capability and functionality. It now has a comprehensive portfolio of solutions and is looking to gain new customers by acquiring within its field services market, Sullens said.

Founded in 1984, WorkWave caters mainly to small and medium-sized pest control, lawn care, landscaping, HVAC, food and package delivery, e-commerce and janitorial services companies. Its sweet spot in terms of buys is companies that have between USD 5m and USD 25m in revenue, though Sullens noted the company is eyeing a few deals bigger than that.

Roughly 90% of WorkWave’s revenue comes from the US, though it has customers in 50 countries. The company is primarily looking for domestic buys, but is also interested in acquisitions as a way to accelerate foreign expansion in Australia and Europe, Sullens said. Its European headquarters is in Italy, with additional US offices in Boston, Honolulu and St. Louis.

WorkWave had 2016 revenue in the mid-40 millions, compared to USD 36.5m in 2016, according to Sullens. It projects 20%-30% organic growth this year, he added.

The company, known as Marathon Data Systems until July 2015 when it acquired fleet tracking firm Foxtrax GPS, has completed at least six acquisitions since 2010, most recently purchasing GPS and telematics firm GPS Heroes in December.

To-date acquisitions have been funded through cash and some debt, Sullens said. Multiples in the space can vary from 2x-3x revenue to 7x-10x revenue, he added.

Sullens said there are no plans for a CGP exit at this time, though he acknowledged there is a “reasonable likelihood” a sale will be explored within 12-24 months. CGP did not respond to requests for comment.

WorkWave peers include Francisco Partners-backed ClickSoftware, GE Digital-owned [NYSE:GE] ServiceMax and Verizon Communications-owned [NYSE:VZ] Telogis, though they focus more on the enterprise market, according to Sullens. All could be potential acquirers of WorkWave, as could private equity firms looking for a platform, he said, noting that the field service software and transportation and logistics market for SMBs remains highly fragmented.

In terms of recent market activity, Sullens pointed to ServiceTitan, a mobile, cloud-based management platform for home service businesses that announced a USD 80m Iconiq Capital-led Series B funding round in March. In 2015, the company raised USD 18m in a Bessemer Venture Partners-led Series A funding round at a post-money valuation of roughly USD 100m.

Last November, Verizon acquired then-listed company Fleetmatics PLC for USD 2.4bn, while GE Digital bought ServiceMax, a provider of cloud-based field service management solutions, for USD 915m.

WorkWave originally focused on the pest control market. The majority of its growth and expansion came after Sullens was hired in 2008.

The company has close to 8,000 active customers (comprising 80,000 users), of which 2,500 are pest control companies, translating to roughly 30%-40% of the market. It has 250 employees and expects to hire roughly 20-25 more by year’s end, Sullens mentioned.

Corporate advisors for WorkWave include law firm Kirkland & Ellis and accounting firm BDO. Its debt provider is Wells Fargo. ArchPoint Partners represented the business on its sale to CGP.

by Deborah Balshem in Fort Lauderdale

As seen in the mergermarket, an Acuris company, newsletter on 15/08/2017

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