In a press release on October 9th, 2014 Exact Software announced they are in negotiations to be purchased by Apax, a UK-based private equity firm focused on long-term growth companies in multiple industries, including technology. Exact is probably best known in the United States for its JobBoss ERP system, which has a significant user base of small to mid-sized manufacturing job shops and other manufacturing and distribution customers. Exact’s other products include Macola, MAX, Exact Synergy, Exact Global Next, and Exact Online. So what could this Exact Software buyout mean for their customers?
Matthew Heerey, General Manager at Exact Americas, has informed customers there will be no change in service. According to Mr. Heerey, this buyout will have no impact on the organization of Exact, will allow JobBoss to maintain as a separate business unit, and will increase Exact’s product offerings, given the financial and management support from Apax.
Ultra’s Take on the Buyout
Knowing how these buyouts work, here’s a couple factors Ultra has thought about. First of all, Apax also owns Epicor, which itself was previously a merger of Activant and Epicor, with Activant’s management team leading the merger. The merger between Activant and Epicor led the company to become focused on only two products: Epicor E10 for manufacturers and P21 for distributors. As an example of one change post-merger, Tropos (Epicor’s food and beverage ERP) and Eclipse (their distribution ERP) are not in the future sales plans for new accounts. New potential customers are being asked to only look at E10 or P21, respectively.
Recently, Apax was trying to sell Epicor but pulled back on their endeavor. There are many speculations as to why this plan fell through, but the reality is that Apax was probably looking for a sale close to $1 billion, which is a large number for anyone except the big six ERP vendors – SAP, Oracle, Microsoft, Infor, Sage, and Epicor. Given this sale was not successful, Apax appears to be “doubling down” on ERP with this latest purchase of Exact.
At this point, you might start to think Apax is getting their tentacles into everything, as they also previously owned part of Plex, albeit not a majority share. Plex is a pure SaaS model which recently received an extensive upgrade in functionality and look and feel.
What Will Apax Do with Epicor If They Get Exact?
So here’s the question: will Apax merge Epicor and Exact? We think they will probably keep the companies separate given one is headquartered in Europe (Exact) and the other is headquartered in the USA (Epicor), especially since these companies have the most influence in the territories in which they are headquartered.
Will Product Overlap Be an Issue?
Another item to think about is the products that overlap in the United States, namely JobBoss, Macola, and Max, are probably at risk of limited future development and discontinuation. Exact has jumped on the cloud bandwagon and seems to be pushing their customers onto more products with cloud offerings, like Exact Online from JobBoss. But an interesting point to make is that Epicor has yet to develop much in terms of cloud solutions.
Our Final Predictions
Given the above, our final predictions are thus – we would not be surprised if JobBoss, Macola, and Max were moved to Epicor to support their customers by offering an on-premise upgrade to E10 (or P21 for distributors). We also expect Exact Online and its development group to assist in moving Epicor to a true cloud SaaS model, or for Epicor to offer its own solution.
To stay up to date with the latest news from Exact Online, visit their website here.