By now many have heard that Activant was sold to a private equity firm and that Apax Partners, the acquirer, also purchased Epicor with plans to merge the two companies, creating a well-diversified corporate software company serving manufacturers and distributors in industries ranging from retail to automotive, from hotels to construction-oriented distributors and much more.
While they’ll be much written on the efficacy of this deal and how there will be operational synergies as well as providing platforms for both companies to grow (reportedly for Activant to expand internationally), from an electrical industry viewpoint, we’ve had some thoughts:
- What impact, if any, will this have on IDEA, since Activant is the backbone for the IDX as well as the IDW?
- Longer-term, how will this impact Activant’s support?
- In the short-term, will Activant employees be more concerned for their jobs or serving their customers?
- Will customers delay ERP purchases while they see how everything plays out?
- Activant has been active in the electrical industry through their involvement in the IDEA as well as through NAED with its Vista Information Services offering. Will being owned by a different private equity firm, who presumably paid more and hence will have higher expectations, change this level of support in the interest of getting faster paybacks?
- Presumably some Activant personnel had phantom stock options. Will they stay?
- The rebranded company, as Epicor, will need to deliver results. With industry consolidation, there will be less new ERP opportunities and those distributors seeking new ERP systems are more sophisticated. How much incremental opportunity is there in the electrical space? Could more “bolt-ons” and maintenance fees be in the wings?
And what will Infor’s response be? Will they be content to see competitors (defined as software companies) merge or will they seek to play the acquisition game themselves?
And could this could pose an opportunity for cloud computing / SaaS services, knowing that distributors desire options?
Thoughts?
8 Comments
On the surface it looks like the Epicor/Activant purchase by Apax for more money, might, be the life line that IDEA needs to stay alive. Let’s understand it is a win for Retailers like Lowes, Wal-Mart, Home Stores and other large retailers. Not for distributors.Maybe someone at Activant will or can answer their support telephone.
We only use the IDW/IDX for our A-B products!
There are much more economical VANs and Direct connects to be had.
Wonder what IDEA’s board thinks about this and if they have a backup plan if our Activant supporters are no longer there and Epicor decides not to support IDEA (or if their fees go up).
Most private equity firms will make purchases with the goal of turning there investment in 3-5 years. Having come from a company who was purchased by a private equity firm I have already seen the focus being on improving the bottom line, not customer service. Most likely their intent will be to make it attractive to the next buyer. How they want to achieve that is yet to be seen.
This article from PC World might shed some light on the actual deal. You can copy and paste the link into your browser.
http://www.pcworld.com/businesscenter/article/224162/equity_firm_to_buy_epicor_activant_in_2_billion_deal.html
I’m pretty sure there will be more revealed as time goes by.
And here is another article about the bid that Infor is making for Lawson: Again you can copy paste in your browser.
One would suspect this sale is more about cash flow money than creating better software.
There seems to be a rush to gobble up ERP software companies.
The opportunity for a company to loose focus on their customers is ripe.
IDEA has been on thin ice for some time.
From a distributor viewpoint, my office has heard some concerns about ‘service’. Parts pf Actvant as well as other ERP software companies have been sold before and many have good experiences and some not so good.
From my experience to present, very few distributors use all the power of their ERP system. The reasons vary. Many fool themselves into thinking that they have their prices and thus profit covered. They cuss SPA/Rebates and seek more nets. And then turn around and ask for more SPA’s to be more competitive.
So, the thought is, maybe you are worrying about the wrong issue. Maybe you should be concerned about how you run your company. Inventory to CASH is what this business is about.
What do you think?
Right on Brother.
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