Experts Analyze PTC's Potential Sale
By Alliston Ackerman
September 15, 2008 - Early last week, the rumor mill began churning when The Financial Times reported that product lifecycle management provider Parametric Technology Corporation (PTC) had hired Goldman Sachs as an adviser and was in the early stages of identifying potential buyers. The Financial Times' sources also said that several of PTC's larger competitors, as well as private equity investors, received data on the company, including a reported price tag of $2 billion. So far, PTC spokesperson Nicole Rowe has declined to comment on the rumored sale.
CGT asked industry analysts to share their thoughts on the rumor, including its validity, motivations behind the sale, potential buyers and the implications for the user community. Here is what they had to say:
"The acquisition of UGS by Siemens in January of 2007, which was followed by Oracle buying Agile PLM in May of the same year, caused a significant shift in the center of gravity of the PLM landscape. With Oracle and Siemens becoming prominent PLM vendors, one is inclined to consider the larger software vendors [SAP and IBM] as interested buyers... Would one of the other PLM vendors be interested? Might PTC be a consolidation play for Siemens or Dassault Systemes? Market consolidation has been successful in other large enterprise software markets and PLM customers, many with mixed PLM environments, might benefit from better customer focus and concentrated product development that would result from a duopoly.... The final option to consider is that there is no buyer; with PTC's market cap of over $2 billion and sales of $1 billion, the asking price may be reasonable, yet a significant one, and PTC may stay the pretty girl nobody wants to dance with.... In reality, none of the more likely scenarios we considered above will have any negative impact on PTC users. If anything, a new management may force greater consistency and better execution of PTC's product roadmap which is checkered with acquired companies (ten since 2004) that were not fully and effectively integrated under the Windchill platform." - Joe Barkai, Practice Director, Product Lifecycle Strategies Manufacturing Insights, an IDC Company (Click here to read Barkai's comments in full)
"With the flurry of acquisitions around PLM it makes sense for PTC to explore all options for growth, including being acquired. This consolidation impacts PTC's positioning in the market versus a few years ago as it has expanded from a provider of CAD tools to an enterprise application provider of product lifecycle management software. It should also be noted that PTC has most likely been looked at as part of the due diligence in other acquisitions. Since PTC was not acquired, there are now fewer buyers. A sale may not occur at all and PTC is in great financial shape. However, given the market consolidation, its worth exploring before the buyers are all gone." - Michael Burkett, Vice President Research, Value Chain Strategies Group, AMR Research (In his analysis for CGT, Burkett mentioned Autodesk, ANSYS, MSC, Cadence, SAP and IBM as companies that may benefit from acquiring PTC.)
"We view PTC as one of the leaders in the PLM market. So, I do not see any URGENT reason for such a sale. However, the idea of PTC trying to get itself bought is within the realm of possibilities. If the rumor is true, I can only speculate that PTC management did analysis of long-term scenarios for the company's future and did not see a growth scenario as an independent vendor that would allow it to achieve the next level [of size and presence]. I would expect private venture money would acquire PTC or maybe put a deal together where PTC is merged with a company that sells manufacturing operations/automation capabilities -- a counterpart to the Siemens plan when it acquired UGS and merged it with Simatic IT. I would be surprised if another software company that has PLM capabilities would buy PTC." - Marc Halpern, Research Director, Gartner
To read the latest Trends articles from CGT, click here.
September 15, 2008 - Early last week, the rumor mill began churning when The Financial Times reported that product lifecycle management provider Parametric Technology Corporation (PTC) had hired Goldman Sachs as an adviser and was in the early stages of identifying potential buyers. The Financial Times' sources also said that several of PTC's larger competitors, as well as private equity investors, received data on the company, including a reported price tag of $2 billion. So far, PTC spokesperson Nicole Rowe has declined to comment on the rumored sale.
CGT asked industry analysts to share their thoughts on the rumor, including its validity, motivations behind the sale, potential buyers and the implications for the user community. Here is what they had to say:
"The acquisition of UGS by Siemens in January of 2007, which was followed by Oracle buying Agile PLM in May of the same year, caused a significant shift in the center of gravity of the PLM landscape. With Oracle and Siemens becoming prominent PLM vendors, one is inclined to consider the larger software vendors [SAP and IBM] as interested buyers... Would one of the other PLM vendors be interested? Might PTC be a consolidation play for Siemens or Dassault Systemes? Market consolidation has been successful in other large enterprise software markets and PLM customers, many with mixed PLM environments, might benefit from better customer focus and concentrated product development that would result from a duopoly.... The final option to consider is that there is no buyer; with PTC's market cap of over $2 billion and sales of $1 billion, the asking price may be reasonable, yet a significant one, and PTC may stay the pretty girl nobody wants to dance with.... In reality, none of the more likely scenarios we considered above will have any negative impact on PTC users. If anything, a new management may force greater consistency and better execution of PTC's product roadmap which is checkered with acquired companies (ten since 2004) that were not fully and effectively integrated under the Windchill platform." - Joe Barkai, Practice Director, Product Lifecycle Strategies Manufacturing Insights, an IDC Company (Click here to read Barkai's comments in full)
"With the flurry of acquisitions around PLM it makes sense for PTC to explore all options for growth, including being acquired. This consolidation impacts PTC's positioning in the market versus a few years ago as it has expanded from a provider of CAD tools to an enterprise application provider of product lifecycle management software. It should also be noted that PTC has most likely been looked at as part of the due diligence in other acquisitions. Since PTC was not acquired, there are now fewer buyers. A sale may not occur at all and PTC is in great financial shape. However, given the market consolidation, its worth exploring before the buyers are all gone." - Michael Burkett, Vice President Research, Value Chain Strategies Group, AMR Research (In his analysis for CGT, Burkett mentioned Autodesk, ANSYS, MSC, Cadence, SAP and IBM as companies that may benefit from acquiring PTC.)
"We view PTC as one of the leaders in the PLM market. So, I do not see any URGENT reason for such a sale. However, the idea of PTC trying to get itself bought is within the realm of possibilities. If the rumor is true, I can only speculate that PTC management did analysis of long-term scenarios for the company's future and did not see a growth scenario as an independent vendor that would allow it to achieve the next level [of size and presence]. I would expect private venture money would acquire PTC or maybe put a deal together where PTC is merged with a company that sells manufacturing operations/automation capabilities -- a counterpart to the Siemens plan when it acquired UGS and merged it with Simatic IT. I would be surprised if another software company that has PLM capabilities would buy PTC." - Marc Halpern, Research Director, Gartner
To read the latest Trends articles from CGT, click here.