For a partner to one of the big PLM players such as Dassault Systèmes, Siemens or PTC, what is the fastest way to expand the business?
For a partner to one of the big PLM players such as Dassault Systèmes, Siemens or PTC, what is the fastest way to expand the business? Organic growth has its downsides in that it normally takes a long time before results can be harvested. For a company with the ambition to expand their business quickly, buying another established partner can be the better strategy.
In Europe, the Swedish Addnode Group and its subsidiary TECHNIA makes for an interesting example of acquisitions as a path to success. In 2015, they bought German Dassault partner Transcat—in one fell swoop almost doubled the revenue for the PLM business. This purchase has become something of a blueprint for what a successful PLM partner expansion should—or can—look like. Entering the German industrial cluster is, in short, a shortcut to commercial success.
Today, we see PTC dealer PDSVISION take a similar approach to business with today’s announcement that it is buying the German company NET AG System Integration (NET) from current owner Percy Rahlf, Jürgen Ludorf, and other minority owners.
PDSVISION has been very successful in the Nordic and Baltic market, growing rapidly and, in several cases, expanding by following its local customers—often larger companies—out into the world. For example, PDSVISION has used this strategy with Haldex, UniCarrier and JBT.
This has been accomplished not only by selling software, but above all by managing deliveries of sharp, complete solutions. This is exactly what customers want: working solutions, integrated with often diversified software portfolios and everything “salted” with industrial expertise, rather than simply buying software.
The purchase price is not revealed in the press material, but NET has sales of approximately $16.5 million. This means that PDSVISION, which has revenues of approximately $36.5 million, increases its turnover by almost 50 percent in one stroke—approaching a total of $53 million in annual revenues and becoming Europe’s “number two” PTC partner.
In Germany, NET is the number two PTC partner in terms of revenues, coming in just after Inneo.
“By far the largest market in Europe is Germany. PDSVISION’s ambition is to become the dominant player in this field, and the logical first step is to focus on Germany. In addition, it is very important for us to build the company with the highest quality team, and NET came up on the top in this evaluation. These are two very good reasons to close this deal. Now we have a great team to take the next step in our expansion,” PDSVISION chairman Christer Wallberg said to Engineering.com.
PDSVISION Group was founded in 2008 and built its software operations on the expertise of the PLM developer PTC’s program portfolio, which includes solutions such as Windchill (PLM/cPDm), Creo (CAD), ThingWorx (IoT), Vuforia (AR) and Ansys-related solutions on the simulation side. PTC also bases its PTC Discovery on Ansys technology.
In recent years, PDSVISION has also greatly expanded its operations from a Nordic/Baltic focus to also following its customers globally. As stated previously, the company has developed a strong industrial competence and breadth that has made it one of PTC’s leading European resellers, primarily based on the structure built up by PDSVISION Group’s CEO, Johan Klingvall.
Johan Klingvall’s Return to Top Executive
For Klingvall, things have radically changed during the past year. Just last July, he announced that he was stepping down from the post of CEO to become COO. He was replaced by Otto Wetterlin.
Today Klingvall is back at the CEO helm, leading the group’s international advancements after his period as COO. He has thus changed places with Otto Wetterlin, who has taken over the COO role in connection with this major acquisition.
The background to this shift of executives, and to PDSVISION’s new “commercially aggressive” behavior, can be found in the entry of private equity company CapMan Management Buyout Fund. In March 2020, this relatively new investment fund—founded in 2019—acquired a majority stake in PDSVISION.
The fact that CapMan has invested heavily in the PLM industry says something about the potential it sees in this area. In addition to sitting on a pile of pension capital, along with other purely commercial investment capital, PLM investments also indicates that the investor shares the view of the industry’s future importance with leaders such as Goldman Sachs—which recently, among other bets, invested $70 million in Aras PLM—and that further investment is to be expected.
PDSVISION is working hard to staff the company with executive leadership structures that optimize the outcome of these investments. With the whole world as their playing field, the demands for strong, effective and flexible leadership structures are hardly surprising.
Revenues Over $50 million
Back to PDSVISION’s NET acquisition. Notably, PDSVISION has bet on solutions and services with a focus on, “helping companies to successfully enable their ‘Digital Transformation Journey’ from product development to aftermarket services.”
The PDSVISION Group had sales of approximately EUR 31 million in 2020. The company is headquartered in Sweden and has operations in Finland, Denmark, Norway, Germany, UK and the United States. That being said, the existing German PDS company has been relatively small, but now will get the strength of a much larger local player.
NET most recently had annual revenues equivalent to EUR 14 million, which places NET in second place in terms of PTC-related German consulting and license sales at the reseller level. NET sits just behind Inneo, which is slightly ahead in terms of revenue.
Johan Klingvall commented that Germany will now be one of the company’s largest regions, with an outstanding growth potential.
“This acquisition makes it possible for PDSVISION to continue the growth of the services we provide our customers and partners, not only within the European mainland but also as part of the continued expansion of our global footprint. Together with our existing operations, Germany will be one of our largest regions with great potential for continuous growth. In addition, it complements our established geographical coverage in Germany,” says Klingvall.
“When we acquired NET, we saw the potential synergies in combining our services and winning cultures, not only to continue to support our customers but also to develop a deeper understanding of how we can best improve the services and support we provide while we guide them through their digital transformation journeys,” Klingvall adds. “I am happy to continue the journey together with our new German colleagues.”
Perfect Complementary Teams
Percy Rahlf, board member of NET AG Systems Integration, says that they look forward to collaborating with the PDSVISION Group team.
“Both corporate cultures fit perfectly,” Rahlf says. “With this strong partnership, we can see the future with confidence.”
NET’s board member Jürgen Ludorf points out how well the two companies’ teams complement each other.
“This works almost perfectly,” he says. “Through synergies and a significant expansion of knowledge, we will be able to offer our customers a broader solution portfolio. NET will be part of a global service and support organization. This fact forms the basis for further growth and benefits our partners, our employees and especially our customers.”
These are interesting statements that indicate exactly where the growth potential lies: in industrial know-how, combined with software expertise. A PLM provider that remains in the old model—where the main objective was to sell licenses and volumize the number of seats—has a tough future; that time is over. This is especially true as more and more companies operating in the PLM area offer SaaS and cloud solutions.
Autodesk was actually the first to come out with this on a broad basis. PTC came a little later, but has their focus on SaaS, rented solutions and cloud as a crystal-clear line. This is seen most recently with the acquisitions of Onshape (CAD in the cloud) and Arena PLM (cPDm in the cloud). The result is a cloud package called Atlas, where the SaaS model will apply.
“SaaS in the cloud will be the new normal. We see an exchange in use here that is exponential,” said PTC’s Jim Heppelmann in an earlier engineering.com interview.
Everything from Software to Infrastructure in The Cloud
The concept of downloading programs and paying for perpetual licenses with maintenance agreements seems to be on its way out. Instead, in the long run, the indication is that both software and infrastructure will be in the cloud. Users connect to the Internet and from there have access to most things that are needed, from software with capabilities that cover most needs, to infrastructure and High-Performance Computing (HPC).
The outcome of this is that aspects other than license money and large license volumes will be the primary driving forces for the companies operating on the partner side in the PLM, ERP, automation, distribution and aftermarket arenas. As opposed to the old way, with licenses, they will invest the big money in additional services around implementations, adaptations, customizations, database set-ups, methodology, industrial product development knowledge and expertise in manufacturing automation, training and other things. These, in turn, can provide great technological and rationality gains for those who hire these new, globally active PLM specialist consultants.
PDSVISION has taken this path, and there is a great deal of evidence to suggest that this will strengthen their position significantly with a business that is already firmly rooted in the German high-tech industrial cluster.
