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Nemetschek AG Exec’s Talk Details of Bluebeam Acquisition with Architosh

Nemetschek AG’s Executive Board members in charge of the group’s overall strategic direction, CEO Sean Flaherty of Nemetschek Vectorworks, Inc., and CEO Viktor Varkonyi of Graphisoft, Inc. discuss the thinking and outlook behind the recent acquisition of US-based Bluebeam Software Inc.

Earlier this month Munich-based Nemetschek AG, one of the world’s global leaders in AEC (architecture, engineering, construction) software and services, announced they were acquiring Bluebeam Software of Pasadena, California, for $100 million.USD, in a 100 percent share all-cash deal.

MORE: AEC News: Nemetschek AG acquires US-based Bluebeam Software Inc.

The acquisition was not surprising for media who follow the Munich, Germany-based holding company whose revenues and profits have continued to climb steadily even in a tough global economic environment. Nemetschek AG’s stock, which is listed on German stock exchanges, has roughly doubled in the past year, reaching a record high 84.euro in early September. Its market capitalization is fast approaching 1 billion US dollars, currently at 760 million euros.

01 - Nemetschek AG's stock is traded on the German stock market and has basically doubled in the past year.

01 – Nemetschek AG’s stock is traded on the German stock market and has basically doubled in the past year.

In the first quarter of 2014 its subsidiary Graphisoft of Hungary made big news in the AEC world with its launch of its BIMcloud in Japan, along with the announcement that four of the largest AEC companies in Japan—including some of the biggest construction firms in the world—had standardized their BIM operations around Graphisoft’s ArchiCAD. And the Group’s Vectorworks subsidiary is already the market share leader in CAD in Japan.

With an important global footprint, market share dominance in the third largest economy in the world (Japan) and forth largest economy (Germany)—see chart, Architosh, “Graphisoft in Japan: Pictures and Notes from the BIMcloud Trip,” 13 Apr 2014)—the Nemetschek Group has much to offer for international growth for Bluebeam Software. At the same time, Bluebeam is a market and mindshare leader in major US construction companies, making the mutual benefits between Nemetschek and Bluebeam well matched.

In this interview, Nemetschek AG Executive Board Members, Sean Flaherty, CEO of Nemetschek Vectorworks, and Viktor Varkonyi, CEO of Graphisoft (both tasked with overall strategic leadership for Nemetschek AG) discuss more of the details and global perspectives around the Bluebeam acquisition…and such acquisitions in general.

The Interview

AFR (Anthony Frausto-Robledo): Perhaps I can start by noting that I was aware from AIA 2014 that the Nemetschek Group was in acquisition mode. Let me ask you, when did the Group decide to approach Bluebeam about an acquisition?

SF & VV (Sean Flaherty & Viktor Varkonyi): We can’t release pre-acquisition details, but we can share some information about our decision process. We continuously screen the market, and our high cash reserves give us the required scope to perform acquisitions. We are currently focusing on extending our solution portfolio and market position worldwide, both organically and via acquisitions. Bluebeam’s market reputation and outstanding position in the construction industry led us to contact them, so we could learn more about their products and perspectives. Based on those communications, and as soon as Nemetschek AG’s executive team was convinced about the strategic fit, we initiated negotiations. However, it took time to finalize.

AFR: Without giving away too much, what can you say about the Group’s (aka: Nemetschek AG) acquisition perspective at this present time? Is there an overall arc guiding the acquisition strategy beyond what you just said and if so what can you say about it? 

SF & VV: Yes, we have an overall acquisition strategy. We very carefully consider what makes sense and review candidates intensively. Our main parameters are:

  • Acquisitions should be predominantly along the value chain of the AEC industry
  • The company should have a minimum revenue size and a proven business model. At Nemetschek AG’s level, it doesn’t make sense to acquire a lot of micro caps because it drives complexity. However, on the brand level, smaller acquisitions are possible
  • There must be a strategic fit in order to expand our international footprint and / or close technology gaps. A good example is DDS, which was acquired last November because of its competence in MEP. Bluebeam fit our acquisition strategy because of its expertise in field collaboration
  • Companies should fit Nemetschek AG’s profitability goals. Our mid-term target is profitability (EBITDA margin) in the range of 23-25 percent
  • Lastly, we look for strong, passionate managers and leaders who enable a robust company culture. We search for companies that are hungry for great success and that want to keep pushing the limits with the additional help of the Nemetschek Group. And, because one of the key aspects of our overall strategy is to have strong brands in the market with a committed management team, we want to keep the leadership, employees, and a strong company culture intact.

AFR: Recently Trimble has emerged as a true full spectrum AECO software and services provider with its acquisitions of SketchUp and then recently Gehry Technologies. And Autodesk and Bentley are constantly acquiring small companies. How is Nemetschek responding to these companies, the trending with Trimble and their appetite in general? Nemetschek cannot afford to be as aggressive with its buys—does that matter in the grand scheme?

SF & VV: While your question stems from an American-centric perspective, it’s important to consider our larger, global presence in the AEC market, particularly in the design segment. With our strong financial position, we’re also moving to acquire companies that fill out our portfolio. Bluebeam is our third investment this year, following earlier moves in the 5D marketplace in Europe. The Bluebeam acquisition marks a shift to build on our existing North American market share and deepen our presence. We don’t see Trimble as a competitor, although there is some overlap in our product lines, and we collaborate with them to push open standards for building design.

AFR: I think the Bluebeam acquisition could be seen as quite brilliant in the coming years. Their position in the US market on the construction side is very strong. How do you see that playing itself out for the Nemetschek Group’s portfolio in general? How will the Group help push Bluebeam in Asia and Europe? 

SF & VV: Yes! Bluebeam is a perfect addition that strengthens our solution portfolio across the life cycle of the building process with the addition of drawing-based workflows to augment our model-based BIM workflows. With our Open BIM philosophy, we are committed to making project information available to everyone, a belief strongly held by Bluebeam, as well.

Bluebeam is also a market leader with strong brand recognition and awareness in the US. With this acquisition, the Nemetschek Group not only extends its solution offerings strategically, but it also reinforces its international market presence, especially in North America. At the same time, our strong CAD brands in the design segment benefit from additional customer potential. In turn, Bluebeam will profit from the Nemetschek Group’s stronger presence in Europe and Asia.

AFR: Bluebeam has some special software connections to rival BIM authoring tools. Is the goal to make similar connections to ArchiCAD, ALLPLAN and Vectorworks in the fullness of time? Will the group give Bluebeam the freedom to continue its business in supporting rival platforms with which the Group competes? 

SF & VV (Sean Flaherty & Viktor Varkonyi): We believe that customers benefit from the use of open standards and from having the choice to use the products that best meet their needs. This means that Bluebeam will continue to support their current products. A key advantage of the Bluebeam offering is that its customers won’t have to worry about which package was used to create the drawings. Plus construction companies maintain the ability to work with drawings created in multiple products.


Much of the software connection value from Bluebeam is to overcome the issue their users had with other vendors’ software not producing intelligent PDF files. Nemetschek AG brands have a long history of producing high-quality PDF files, which can already be used in Bluebeam workflows. An exciting direction for the future will be to see how Nemetschek [the Group] products can directly integrate into Bluebeam’s workflow solution, Bluebeam Studio.

AFR: Revu is a fantastic tool (better for AEC than Acrobat in many regards—and less expensive—but it doesn’t work on Mac yet. With the Nemetschek Group’s many customers heavily deployed on OS X, can the group help this company get that product to those customers faster, perhaps?

SF & VV: Nemetschek is the leader for the Macintosh platform in the AEC market. This is another obvious synergy with Bluebeam. As you know, Bluebeam is working to provide greater support for Mac users, and you can contact them directly to get more details about product release dates.

AFR: Lastly, why did Bluebeam make this decision to join Nemetschek AG? Certainly they could have had other options. 

SF & VV: Bluebeam’s management team has developed the company into its current strong position in the PDF-collaboration and workflow market. In order to participate in the strong growth of the markets and to step into the next growth period (regional and product-related), Bluebeam needed industry-focused ownership.

Bluebeam profits from the entry of new regional markets, especially in Europe and Asia, and has found the right partner to enable the next stages of its development with Nemetschek. In addition, our strong history of keeping innovative software companies intact after an acquisition provides the opportunity for the management and staff of Bluebeam to continue the work they’ve been successful in thus far.

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