Here’s what the PLM community needs to know about the acquisition that will help PDSVISION cross the $100 million milestone and establish a strong bridgehead in America.
PDSVISION Group, Europe’s leading PTC Value Added Reseller (VAR), continues to maintain a quick pace when it comes to expansion. Following last year’s acquisitions of German NET AG System Integration and two British PTC partner companies—Root Solutions, and the simulation and analysis company Wilde Analysis—the head of PDSVISION, Johan Klingvall, is now placing a bet on the North American market.
Today, engineering.com can reveal that PDSVISION is buying the American VAR Sconce Solutions Pte Ltd. With this acquisition, PDSVISION expands its global reach and supports its goal of becoming the world’s leading VAR in the PTC sphere. As part of the deal, in addition to Sconce’s American staff of 35 people, PDSVISION also gets an Indian team of 75 employees.
Moreover, as a result of today’s deal, PDSVISION expects to cross the $100 million milestone in annual revenue in 2022. No purchase price has been revealed; however, an indication of the price can be related to Sconce’s 2021 under profitability reaching revenues of approximately $22 million. Such a calculation is often based on an average of operating profit and turnover, which is multiplied by the multiples of similar listed companies. The multiple is usually between 3 and 8. The larger, more well-run and fast-growing a company is, the higher the multiple; the smaller, more owner-dependent and slow-growing, the lower the multiple.
“Together with Sconce, we share the vision of 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. Our new Sconce colleagues will mean a lot in our continued journeys,” says Klingvall, CEO of PDSVISION, in a comment on the announcement.
Owned By the Investment Fund CapMan
Ever since the investment fund CapMan Buyout XI took over ownership in 2020, PDSVISION has entered a dramatic growth phase.
Since its formation in 2008, PDSVISION has based its offerings on selling the PTC portfolio to the PLM market, including solutions such as Windchill (PLM/cPDm), Creo (3D CAD), ThingWorx (Industrial IoT) and Vuforia (Augmented Reality). When it comes to advanced simulation & analysis, PDSVISION also relies on offering programs from CAE leader Ansys.
PDSVISION has also developed its own software, which adds additional capabilities on top of the solutions included in the PTC portfolio. But equally important are PDSVISION’s PLM services, technical support and cloud-related solutions.
Sconce’s managing partner, Brian Bezdek, states that an important factor in this acquisition is that because both parties are part of PTC’s VAR network, they already exist within the same PLM and business culture.
“That’s how it is,” says Bezdek. “We complement each other perfectly. We have the same business goals and team culture. We will now be part of a global organization, where our combined knowledge and experience will give customers an even broader solution portfolio and drive future growth. It will be the basis for a strong partnership that will benefit both customers and employees.”
A Strategic and Growth-Oriented Acquisition
Generally speaking, Sconce is a PTC Global Systems Integration Alliance Partner. The company was formed in 2001, only a little earlier than PDSVISION. The American PTC partner is also an authorized training partner and VAR of PTC’s digital transformation solutions, and also offers PLM-related advice and support—all in all, quite similar to PDSVISION.
Bezdek also points out that Sconce, like PDSVISION, specializes in PLM, AR, IoT and Industry 4.0 solutions and services for the engineering and manufacturing industries.
According to the press material about the deal, Sconce “provides a complete range of services including business transformation and best practices, process consulting, PLM/ALM (Application Lifecycle Management) and SLM (Service Lifecycle Management) strategies and roadmaps, scoping and implementation services, older system migration, custom improvements, enterprise system integration, enterprise architecture size and infrastructure system support.”
“The acquisition is strategic, synergistic and growth-oriented,” says Sconce’s founder, Mey Annamalai. “The timing is good because the pandemic wave is fading, and the digital transformation is accelerating. Both companies have similar histories, strong PTC partnerships and operate in the same ecosystem. Our IPs, industry-specific solutions, apps, SaaS offerings and customer bases complement each other very well. Together, we are better positioned to help our customers accelerate their product development process and improve operational efficiency in the PTC product suite. I am confident of a fast and smooth integration and a good growth path.”
“I’m looking forward to working with our new global team. This partnership and the expanded expertise it brings will be a true differentiator for the combined Sconce and PDSVISION enterprise and our customers,” says Vern Heyer, partner of Sconce.
Passing the $100 Million Milestone
Taking into account merging with Sconce, PDSVISION expects to recognize sales of approximately $110 million in 2022.
PDSVISION is headquartered in Stockholm, Sweden, and has operations in Finland, Denmark, Norway, Germany, the United Kingdom, South Africa and the United States.
Speaking to engineering.com, Klingvall says that PDSVISION will “benefit from Sconce’s deep knowledge in several verticals—especially the medical device market—along with their hosting and cloud expertise and rich software portfolio, which will improve the product development and digital collaboration capabilities of PDSVISION’s customers.”
A Good Opportunity to Win the Large Customers
I asked Chister Wallberg, chairman of the board for PDSVISION Group, what it is that makes this acquisition so important.
“Several things,” he says. “But I want to emphasize that with the Sconce acquisition, PDSVISION Group will be one of the strongest PTC dealers in the world. This, in turn, means that by virtue of our now-global presence with highly competent resources, we can also serve global companies in an efficient manner. In this way, we become even more attractive as a PLM actor for even larger global organizations. As PDSVISION is now the largest of PTC’s VARs globally, excellent opportunities are opening up to collaborate even more closely with PTC and thus increase the efficiency and growth of our companies.”
My Take: A Shortcut to Rapidly Increasing Growth
My view of this deal is that there are benefits to both parties. For Sconce, they become part of a larger group with global ambitions; financial resources via PDSVISION’s main owner, the CapMan investment fund; and a will to expand into enter larger industrial companies with their PLM approach built on PTC’s program portfolio.
For PDSVISION, one of the main advantages is that they get a strong bridgehead in North America. Also important are Sconce’s technological capacities in PLM generally, as well as in ALM, SLM, IoT and cloud technology, not to mention their process knowledge.
An interesting piece of background is that PDSVISION has built up strong positions among small and medium-sized companies, but has shown a track record that definitely contains the capacity to scale up in a way that can effectively meet the needs of larger companies.
A key question becomes which path is the fastest for a PLM player at the VAR level to expand its business globally in general, and in North America in particular? Organic growth has its downside, in that it normally takes a long time. If you have the ambition to get it done quickly, acquisition can be a strategically better way to go. In this context, sharing a technical and business culture is key.
With CapMan’s resources behind them, and with Sconce as an American bridgehead, there are good opportunities for PDSVISION to take a winning shortcut into the American market, in which it has often proven to be extremely tough for northern European PLM companies to develop organically. Furthermore, PDSVISION and Sconce together—along with PTC’s strong industrial PLM software portfolio—stand a good chance of reaching their objective of scaling up their solutions to larger companies and organizations.
PDSVISION has been very successful in the Nordic market, growing rapidly—and in several instances expanding by following its local customers, often larger companies, out into the world. Good examples of this are PDSVISION customers Haldex, UniCarrier, JBT and the agricultural machine design company, Vaderstad.
PDSVISION has expanded by not only selling software, but also by managing deliveries of sharp, complete solutions. That is exactly what customers want: solutions and integration with often diversified software portfolios and industrial expertise, rather than “just” buying software.
In this light, PDSVISION’s acquisition of Sconce is a promising initiative for growth.
