The Cloud

Will Private Equity Takeover Benefit or Hurt Acumatica?

Jon Roskill, CEO of Acumatica, said his company couldn't have asked for "a better match of  technologies, strategies, and cultures."
Vincent RyanJune 25, 2019

Cloud-native enterprise software provider Acumatica may have gotten a shot in the arm last week to boost its already fast-growing presence in the global enterprise resource planning (ERP) market.

At least that’s how buyer and seller are pitching it. EQT Partners, a Swedish private equity group, acquired the company through an investment vehicle owned by the same holding company that owns IFS AB (Industrial and Financial Systems), a larger ERP provider.

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Acumatica has been growing fast, as we noted in our Tech Companies to Watch. Last year, Nucleus Research ranked it first in usability among all ERP platforms, eclipsing competitors NetSuite, Epicor, and FinancialForce. The Bellevue, Wash.-based company is adding to its workforce by 40% to 50% each year. And its 350-channel partners are a definite strength in the market.

A customer review on G2 Crowd proclaims: “Acuamatica is both a very powerful tool yet extremely easy to use. Their pricing model is superior to others in the marketplace and we feel that from a price/performance standpoint, it far outshines its competitors.”

The 5,000 small and midsize businesses in the United States that use Acumatica’s products, therefore, might feel a little trepidation about the impending tie-up. IFS is many times larger than Acumatica, and is more traditional, with many customers using on-premises deployments. Its reviews on G2 Crowd are more in the vein of “Not amazing, but not too bad” and “Efficient but quirky.”

Acumatica big small deal

In addition, private equity investments in software vendors aren’t always beneficial to the seller’s users, especially for the smaller company that gets bolted onto the larger one.

Finally, EQT Partners bought a stake in IFS in 2015, and, judging by its transaction history, doesn’t hold onto investments for very long.

So, will Acumatica-IFS wind up a smaller scale Sprint-Nextel, eBay-Skype, or Hewlett-Packard-Compaq?

Analysts appeared to be applauding the deal, and the respective CEOs definitely had a good pitch for why the deal will work.

“IFS and Acumatica can benefit from one another’s resources, capabilities, and strategies, but still enjoy full autonomy and rapid growth trajectories while avoiding disruptions to business operations or brand equity,” said the statement by IFS CEO Darren Roos. “I ultimately see this as two allies to cover the market from end to end, with combined strength to take market share.”

In a press release announcing the June 20 deal, Mickey North Rizza, program vice president of enterprise applications at IDC, stated, “IFS can bolster Acumatica’s ability to globalize and expand in key industries, while Acumatica can support IFS with increased functionality in business intelligence, analytics, and extensive experience of providing a true born-in-the-cloud ERP software-as-a-service offering.”

Jon Roskill, CEO of Acumatica, said his company couldn’t have asked for “a better match of  technologies, strategies, and cultures.”

The deal announcement also says that Acumatica will retain control over much of its operations, and the brands and marketing will remain separate. (The companies will share a common board leader, IFS Chairman Jonas Persson.)

If that’s indeed the case, Acumatica may truly benefit. It has a growing number of international customers, and IFS has 15 customer support centers worldwide. And EQT has experience integrating enterprise applications companies from the United States, having purchased WorkWave two years ago.

Acumatica users in the United States, cross your fingers.