Excitech, a UK-based computer-aided design (CAD) software and consultancy company, is in acquisition talks that would bolster turnover by at least 10%, a source close to the situation said. Management will revisit stake sale plans from early 2018.
The source did not elaborate on the acquisition target, save that it is a UK-based company that operates within Excitech’s core verticals. It is also a gold partner of Autodesk, the San Rafael, California-based software design and services company.
An announcement could be made by the end of May. While the deal would immediately boost Excitech’s turnover by at least 10%, the source said post-transaction cross-selling opportunities present the prospect of significant incremental sales into the additional customer base.
The talks are being handled internally, with the transaction to be funded from working capital, the source said.
This news service reported in June 2016 that Excitech had appointed HW Corporate Finance to review the possibility of a capital raise from a financial investor or a larger software services business. However, the source said the uncertainty created by last June’s Brexit vote, coupled with Autodesk changing its licensing model, prompted management to withdraw Excitech’s strategic plan to raise capital. Excitech did receive an offer from a US-based strategic investor in June 2016, the source said, declining to elaborate.
The capital raise option will be reviewed again from early 2018 onwards, when management believes the company will return to a strong growth position as its transition to a recurring revenue model continues, the source said.
Between the 2012 and 2016 financial years, revenue surged 79% to GBP 31.3m, while operating profit rose more than 300% to GBP 2.1m.
The company maintains a relationship with HW Corporate Finance, the source said, and could reappoint it as its advisor. Offers from both financial and strategic investors could be reviewed, while the possibility of a management buyout exists. Excitech Chairman and owner Adrian Atkinson could sell his controlling interest in the business, the source added.
The company sells Autodesk software and other third-party software along with its own proprietary complementary software products and services that enable full building information modelling and property management. It services around 2,700 architectural, engineering and construction companies annually, and has close trading relationships with many large engineering, architecture, construction and contracting companies in the UK such as Arup and Partner and Foster and Partners, as reported. It also has relationships with John Lewis Partnership, J Sainsbury and Goldman Sachs .
Atkinson founded the business in 1985. Managing Director David Hughes leads the company, having joined Excitech around four years ago, initially as a sales manager and then sales and marketing director before being appointed MD in 2015. His history includes an 11-year spell as sales director at Eastman Kodak, as well as owning his eponymous business for seven years.
The company declined to comment.
by Lloyd Vassell