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Nemetschek targets up to three acquisitions within 18 months

Nemetschek [ETR:NEM], a German software provider for digital transformation in the construction and media industries, aims to make up to three acquisitions within 18 months, CEO Yves Padrines told Mergermarket.

The company is considering buying in all four of its segments: planning and design, build and construct, operate and manage, and media and entertainment, Padrines said. Talks with acquisition candidates are taking place, he added without being more specific.

Deals make sense to expand Nemetschek’s product portfolio, and to enter adjacent verticals in construction and media, he said, adding that most potential acquisition candidates are in North America and Europe.

The company scouts acquisition candidates directly and has contacts among investment bankers and M&A boutiques, but it is not planning to grant a mandate, he said.

Nemetschek looks at targets with revenues in the EUR 50m to EUR 100m range and also considers smaller deals, Padrines said. In case of a deal, it aims to gain a controlling stake in the target, he added.

To finance potential deals, it has credit capabilities and cash up to EUR 1bn and, in addition, has the option to increase its capital by 10%, he said.

Nemetschek has been acquisitive in the past but has not made large deals in the last couple of years, he said. In December 2021, via its Maxon brand, it purchased the assets of digital sculpting and paining software developer Pixologic. In November 2023, it acquired a distributor in France and, at the beginning of 2024, another in Japan.

However, the company formed an executive leadership team in September and is now planning to be more active in the M&A market, Padrines said. The team will lead Nemetschek’s next growth phase, following trends such as artificial intelligence (AI), and accelerating internationalisation, among other things, according to a press release.

The executive leadership team include Chief Strategy Officer Marc Nezet, Chief Division Officer Build and Construct and CEO of subsidiary Bluebeam Usman Shuja, Chief Division Officer Planning and Design Cesar Flores Rodriguez, CEO of the Maxon subsidiary Dave McGavran, CFO Louise Öfverström and Padrines.

Meanwhile, Nemetschek is also interested in minority investments into attractive start-ups in fields including artificial intelligence (AI), generative AI and generative design, Padrines said. In the last 24 months it has made 12 investments, which support the company’s innovation and contribute to building its pipeline for future deals, he said.

The most recent investment was in January 2024, when Nemetschek invested in Santa Barbara, California-based financial automation platform Briq.

Since his appointment in March 2022 Padrines has led Nemetscheck’s transition to a subscription, SaaS business, he said. In 2023, recurring revenues accounted for 76.6% of total revenues, compared to 66.4% in the previous year, and he expects this to reach approximately 85% in 2024, he said.

The company is also looking to accelerate its go-to-market strategy to strengthen its presence in Asia, he said. Approximately 50% of Nemetschek’s EUR 851.6m in 2023 revenues were generated in Europe, around 40% in North America and 10% in APAC, but mainly in Australia and New Zealand, he said.

Munich-headquartered Nemetschek’s software solutions cover the entire life cycle of construction and infrastructure projects. Customers can plan, construct and manage buildings and infrastructure efficiently and sustainably and develop digital content including visualisation, films and computer games.

Founded by Professor Georg Nemetschek in 1963, the company has seven million users across the four segments and approximately 3,600 employees, according to its website.

Nemetschek has a market capitalisation of approximately EUR 10bn.