Deal changers

Analytics. Automation. Machine learning. Just some of the tools enabling fastgrowing, innovative companies to scale up internationally. We spoke to businesses that have recently been through transformational cross-border M&A to find out how the data revolution is driving their global ambitions.

“We are only just starting out on this journey, I don’t think we will even recognise the way we live in 10 years’ time from how we live now.”

The journey that Donagh Kelly, CEO of Irish telecoms and energy contractor KN Group, is referring to is the move towards an ever more connected world. “You only have to look at the rise of online shopping to see how this connected world is allowing us to do so many more things. But this goes far beyond shopping. Look at healthcare and the rise of virtual services, online prescriptions, and telecare. The possibilities are endless.”

Kelly says he only has to look at his own father to see the way the world is changing. “My dad is 80 now and I am always fascinated by how comfortable he is working on his computer. I can see how he is personally adapting to this new world and how he is managing in his own way with this exciting new environment.”

Potential

It’s an environment that brings enormous potential for a player like KN which has built up a growing portfolio of specialist utilities services across telecoms, transport infrastructure, power and multimedia installation. Today its clients include Eir, Vodafone, Sky, Virgin, BT, ESB and the London Underground.

Kelly adds: “As a business our job is all about providing and enabling that connectivity, whether it’s telecoms, power, energy or transport infrastructure. Bandwidth demands are increasing all the time and we will be at the heart of where this connected world takes us. But connectivity is only a means to an end. It is all about the services that you provide which use that connectivity, and how you make customers loyal to those services.”

He says the long-overdue investment in fibre networks is just one key driver in the market. “This has been put on hold for a long time, but what we are doing now is rebuilding in 10 to 15 years the old copper network which took 80 to 90 years to build in the first place. It’s just one reason why our market will be buoyant for at least another 10 years as we enter a new era of fibre revolution and 5G.”

Kelly does however caution on the rush to 5G. “As the connected world evolves we will definitely need it, but I think that there is a timing issue. Just as with the IoT and Artificial Intelligence (AI) we are still at the start of that journey. But as all these technologies further develop we will need more and more bandwidth.”

French merger

KN Group is certainly well placed to capitalise on these trends and last year the business merged with the Circet Group, a French telecoms player backed by Advent International. Clearwater International advised KN on the transaction.

We are only just starting out on this journey, I don’t think we will even recognise the way we live in 10 years’ time from how we live now.

Kelly had been looking at the strategic options for KN which would enable it to continue its strong growth trajectory. “The partnership with Circet quickly emerged as an obvious solution allowing us to undertake ambitious network rollout plans across Ireland, the UK and internationally. The proposition was very compelling as Circet was dominant in France and was virtually a mirror image of KN. The fact that it was backed by Advent which has a strong history in telecoms was also compelling.”

The combination of the two businesses now creates a diversified player in European telecom services, offering full turnkey solutions across all network technologies in France, the UK, Ireland, Germany, Morocco and the Caribbean. The company generated sales in excess of €1.2bn in 2018.

Scaling up

The power of merging businesses to achieve scale and deliver connectivity in this fast-moving landscape is also epitomised by US-based Deltek, a leading global provider of software and solutions for project-based businesses.

It has made a series of acquisitions in recent years, including the purchase in 2016 of UK project information software company Union Square, a major player in the Architecture, Engineering & Construction (AEC) market. Clearwater International advised Union Square on the deal.

Based in Nottingham, it is now known as Deltek Project Information Management and offers a solution which gives access to project information in one central location. The solution incorporates email and document management, as well as improved file sharing and design processing.

Tim Setchfield, a former Union Square director who is now Senior Product Director at Deltek, said the solution is all about allowing businesses to work smarter and more efficiently.

He says that there has been a huge amount of technological disruption in the AEC market in recent years, driven by the connected world. “Managing data and collaborating on information to make smart decisions is critical for successful companies today, especially in the AEC industry.”

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US ownership

Setchfield, who splits his time between writing software and focusing on wider strategy, says the fact that project management has become so much more challenging drives the need for creative solutions, and the Deltek acquisition has been transformational.

“When Deltek acquired our business it doubled our floor space in Nottingham and we now have a real critical mass of people here including programmers, consultants, sales and support staff. Physically sitting together also promotes and harnesses knowledge-sharing and collaboration, and that’s important for us because our product is quite complicated and demands a lot of domain knowledge.”

The principle of using Dropbox-style technology to update documents has been around in the construction sector for at least a decade. As Setchfield adds: “With any construction project the sheer scale of transactions can be enormous so having a central online location is fundamental. For instance if you’re building a hospital you might have 10,000 different companies involved, so cutting out emails and sharing information centrally becomes really important.”

3D moves

He adds that although Building Information Modelling (BIM) has been around for a while, it is evolving all the time. “A really exciting area right now is how technology is trying to provide the mechanism for sharing 3D models. These are models which contain huge amounts of data, specifications about every minor detail that goes into the supply chain.”

In this regard Setchfield says the use of analytics, automation, machine learning and Virtual Reality (VR) tools are now becoming far more widespread, while the potential of blockchain systems is also being explored. “One of the challenges with the construction industry is the sheer size of these files. With a 3D model you could have up to half a gig of data and transporting that around in real time poses major challenges, which is why a central location is a better model.”

He foresees that machine learning is likely to play an increasingly significant role. “Every software vendor is now looking for ways of exploiting readily available machine learning libraries on the internet, and we ourselves are currently working on our first machine learning project.”

Strategy

Like Kelly, Setchfield is excited about future prospects. “As a result of the sale to Deltek we are now building up a presence in the US. The deal has had other benefits in that it has also allowed us to really look at product strategy, going beyond the day to day product management. Deltek has really brought long-term product strategy to the forefront.”

Deltek has really brought long term product strategy to the forefront.

He adds that Deltek has also made some interesting recent acquisitions of other US companies such as Avitru, which designs software for authoring and managing building specifications that is based on the ubiquitous MasterSpec system. Avitru also has a strategic partnership with the American Institute of Architects. “The deal adds more expertise in the construction supply chain and I am very interested in how we work with them on that,” says Setchfield.

Deltek was itself also recently acquired by Roper Technologies, which operates businesses that design and develop software and engineered products for sectors such as technology, healthcare and energy. However, Setchfield stresses there has been minimal impact on the wider group by that deal.

Macro trends

Another business leader seeing first-hand the impact of these sweeping technological changes is Chad Collins, CEO of US-based HighJump, which develops supply chain software solutions. Collins has spent his entire career in the supply chain technology industry in roles ranging from product development, through to sales and marketing.

Like KN and Deltek, HighJump has also been the subject of significant M&A activity, and in 2017 was acquired by the German-based international technology group Körber. Collins says Körber - which began life as an industrial company - has been at the forefront of spotting macro logistics trends, and a few years ago began expanding its logistics offering.

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As he explains: “It had built up an offering in machine building and the automation of systems integration, and we fit into its broader logistics software strategy and wish to expand further beyond Europe. The deal has allowed us to globalise our product portfolio but also, importantly, given us a long-term view of strategy. We will continue to look for the right technologies to fit in with our product portfolio and look at more places where we need to be to serve our global customer base.”

Clearwater International also recently advised the UK-headquartered Centriq Group, a provider of IT solutions to the logistics, supply chain and retail sectors, on its sale to Körber. Centriq, the holding company for Voiteq and Cirrus Logistics, will sit within Körber’s Logistics Systems business and complements its HighJump acquisition.

Automation

Echoing Setchfield’s point about data, Collins adds that in any warehouse today there are literally “hundreds of thousands” of transactions that need to be processed every day. “The great challenge is how you then allow customers to personalise the automated process to their particular business needs,” he says. “Our architecture is all about giving customers the software tools they need to make these changes.”

Collins points to the example of customers having new products or facilities which demand changed distribution models. “We can adapt their systems in a way which doesn’t change the source code of the product, a really key point. Our USP is flexibility and adaptability, enabling customers to implement user-friendly processes quickly which they can then roll out themselves. We have also been first movers in the cloud and have carved out a place in cloud-based solutions, which customers increasingly prefer.”

Challenges

Collins says a big challenge can be finding solutions for companies which have rigid systems which cannot respond to rapidly changing global supply chain models. “If these customers are having to operate outside newly emerging supply chain systems, it becomes very inefficient for them.”

He adds that the shift to e-commerce models, and the global shortage of labour to perform manual tasks, are other key trends in the market. “This shortage of labour will only further drive automation and robotics. Aligned to that we will see the continued adoption of IoT technologies and increased connectivity. That could just as easily apply to trucks in the supply chain, people moving within the warehouse, equipment within the warehouse, or ordering processes.”

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