In an announcement following by barely 3 weeks the disclosure that Lawson Software had received an unsolicited bid from Infor Global Solutions, private equity firm Apax Partners has announced plans to acquire and merge Activant Solutions and Epicor Software into a new privately-held company, to be called Epicor Software. The new entity will have some 30,000 customers and $825M in revenues. This clearly indicates continuing interest by the investment community in the lucrative ERP marketplace, and an opportunity for larger players in the marketplace other than the two giants, SAP and Oracle.
Who is Apax Partners?
Apax Partners is an independent global private equity advisory firm, founded in 1972 (the same year as Activant). The firm has evolved from a firm focusing on venture capital to focusing on buyouts. They have hovered between 9th and 10th on the list of the 300 largest private equity funds (now in 9th place), according to Private Equity International (PEI).
Apax has five industry focuses: Tech & Telecom; Retail & Consumer; Media; Healthcare; and Financial & Business Services. The Epicor – Activant deal originates from the 12-member Tech & Telecom team, two of whose members are based in the U.S.
Many more of you will be familiar with Activant and Epicor, as these vendors have been around for some time. (Both of these vendors are showing up on some of our recent client selection long lists, and we are familiar with both Epicor and Activant and their product lines through covering the ERP marketplace for nearly 15 years.)
Activant focuses on two things: small-to-medium sized retail, and small-to-medium sized distribution businesses. Activant’s focus has enabled it to build a customer base of some 15,000 customers in these verticals. Typical customers on the retail side are hardware retailers & home improvement centers; lumber and building material dealers; pharmacies; and specialty retailers. On the wholesale side Activant’s strategy is to be able to offer a range of solutions from an “out of the box” module to a solution covering a much wider footprint, to wholesale distributors in electrical supply; plumbing; HVAC, industrial equipment and supplies; and paper and packaging. Activant has a long list of products, most prominently Eagle, Prophet 21, Eclipse, Prelude.
Epicor has had a solid presence in the midmarket for quite some time, showing impressive revenue gains under the leadership of George Klaus. Epicor gained a foothold in manufacturing in 1998 with the acquisition of a vendor by the name of Dataworks. Through a series of strategic acquisitions (Scala among them), Epicor expanded its presence both internationally, as well as into the retail sector, while coming out with new products (Epicor 9, for example, which came out December 2008) that has given it a solid presence in the mid market. Epicor targets midmarket end-users in the Electronics, industrial equipment and machinery, electronics, med devices, automotive, capital equipment and CPG industries. Epicor has at least an equally long list of solutions, featuring: Epicor ERP, Epicor Express, iScala, Vantage, Vista, Retail, HCM, Clientele
A few early observations:
- The two companies are built on similar .NET, Microsoft and Progress technology foundations, which means that putting these together under one umbrella makes sense from this standpoint.
- Epicor’s and Activant’s market focuses overlap in distribution, but their retail focuses are quite different.
- The two companies could not have more different sales approaches: While Activant takes pride in it direct sales approach, Epicor is winning accolades for its growing reseller program.
- It is not immediately obvious to us that Apax has done such a acquisition/merger deal before. Epicor has demonstrated its ability to amalgamate entities (Activant has experience doing this as well), and so it will be worth watching to see who takes the leadership in combining the two companies.
This certainly makes the play for the SMB end-user much more interesting. SMB Research has seen a certain amount of ham-handedness in targeting the SMB market, so one can only hope that this acquisition ups everyone’s game to the benefit of the SMB. We’ll see.