IFS AB, the Sweden-based global enterprise applications company, is seeking acquisitions for its field service management software business, according to Marne Martin, president of IFS Service Management.
The private equity-backed company is primarily looking at targets in the US, Australia and Europe, including Germany and France, Martin said. The service management division caters mainly to the telecommunications, utilities, manufacturing and services markets, she added.
Ideally, service management acquisition targets will have at least USD 10m in revenue and add new capabilities or new customers, Martin said. Increased consolidation is expected among “a cluster of companies” in USD 10m to USD 30m revenue range, she noted, explaining that many targets in that revenue range have attractive capabilities but could use a more global reach or better access to capital.
According to Martin, valuation multiples in the space range from 1.5x to 9x revenue but typically average 4x to 5x revenue. The executive said IFS’s service management division has 12 to 15 companies on its radar.
An industry banker identified Astea [OTCMKTS:ATEA] and Geoconcept as examples of the types of service management software companies that might pique IFS’s interest, should they come up for sale. Horsham Township, Pennsylvania-based Astea has a market capitalization of approximately USD 22.7m, while France-based Geoconcept has revenue of EUR 12m (USD 10.4m), according to its website.
IFS generated revenue of USD 494m in 2017, Martin said. The company has been backed by Swedish private equity firm EQT since 2015. For the quarter ended 31 March, IFS had net revenue of approximately USD 132m, an increase of 15% from 1Q17, according to the IFS website.
IFS develops and delivers enterprise software for customers that manufacture and distribute goods, maintain assets and manage service-focused operations. The company’s 3,500 employees support more than 10,000 customers worldwide. Its main three solution offerings are enterprise resources management, enterprise asset management and service management. Service management is the smallest but fastest growing segment, Martin said. The business’s Americas headquarters is in Chicago.
In August, Martin was appointed president of the IFS Service Management business unit and CEO of New Jersey-based WorkWave, which was acquired by IFS in November 2017. Prior to IFS, Martin served as CEO at field service management software company ServicePower Technologies and as CFO of telecom and defense consulting firm Norcon [LON:NCON].
According to an August 2017 Mergermarket report, then Chicago Growth Partners-owned WorkWave had 2016 revenue in the mid-USD 40m range and was projecting 20%-30% organic growth in 2017.
Martin noted that several large service management deals took place between 2014 and 2016, including Oracle’s acquisition of TOA Technologies, Microsoft’s acquisition of FieldOne, GE Digital’s USD 915m purchase of ServiceMax and Francisco Partners’s USD 438m take-private of ClickSoftware Technologies.
IFS’s primary pure-play service management competitors are ServiceMax and ClickSoftware, according to Martin, who added that Microsoft [NASDAQ:MSFT], Salesforce [NYSE: CRM], SAP [NYSE:SAP] and Oracle [NYSE: ORCL] also have service management divisions.
by Deborah Balshem in Fort Lauderdale