Putting recently raised capital to quick use, SMB enterprise applications vendor Made2Manage Systems Inc. today disclosed that it has acquired AXIS Computer Systems Inc., a privately held, Marlborough, MA supplier of ERP software and services to metals and wire and cable manufacturers.
Although terms were not disclosed, the deal is the largest of the four acquisitions Made2Manage has completed in the last 15 months, noted CEO Jeff Tognoni in an interview with Managing Automation. With an eye toward underserved niche markets, Made2Manage in December 2005 acquired Capri Corp., a developer of ERP software for printed circuit board manufacturers, and in August 2004 purchased DTR Software International, a provider of ERP software for plastics processing firms. The company also bought the professional services and support assets of ADS Information Systems in September 2004.
Word of the most recent acquisition comes six weeks after the Indianapolis vendor revealed that it had raised $50 million in equity and debt financing to help underwrite its growth-through-acquisition strategy. As part of the transaction, Thoma Cressey Equity Partners, an investment firm that specializes in M&A roll-ups, took a minority stake in Made2Manage. The private equity firm is also providing Made2Manage with access to debt financing through its relationship with Harris Nesbitt, a banking unit of North American giant Bank of Montreal (BMO) Financial Group.
By acquiring AXIS, Made2Manage immediately becomes the largest supplier of ERP software and services to metals and cable and wire manufacturers, Tognoni claimed. "[AXIS is] the leader -- they are twice the size of anyone else," he noted.
Twenty-year-old AXIS has focused nearly exclusively on these niche markets for most of its history and boasts roughly 100 customers, including: Carpenter Powder Products, Copperfield, Fisk Alloy Wire, Gibraltar Steel, Hendrix Wire & Cable, Northwire, and Standard Steel. AXIS is used for plant management and co-exists at many customer sites with SAP and/or Oracle software used to manage back-office functions, Tognoni said.
AXIS will now operate as a business unit of Made2Manage Systems, with Janna Hoiberg, AXIS' former director of operations, acting as general manager. AXIS' principal shareholder, founder and CEO Ed Verock, is retiring, Tognoni said. No decisions have been made about the company's 65-person workforce, he added.
One decision that has been made is that AXIS' software, which is built with Progress Software Corp. tools but is platform independent, will remain separate from Made2Manage's other lines. Tognoni said Made2Manage will continue to sell, maintain, and extend AXIS' product and service line for the foreseeable future.
While some ERP vendors are approaching M&A rollups with a one-size-fits-all strategy and fusing application code into a single suite, Made2Manage is taking a different tack. "We disagree with the premise that [manufacturers] want one product," Tognoni said.
Instead, the company believes that certain manufacturing niches, such as metals and plastics production -- which rely on a unique blend of discrete and process manufacturing prowess -- require an approach tailored to their business process idiosyncrasies. "Our concept of consolidation is different than other vendors," Tognoni said. "We are keeping product separate, not trying to fuse them. We are injecting capital strength and infrastructure into [acquired software products] to provide better support services in a way that is more economical and better than before."
That means sharing administrative services such as Web-enabled customer support and deploying best practices in sales, marketing, and code development across the entire Made2Manage portfolio of products and services, he explained.
The company does, however, plan to migrate over time to a single service-oriented architecture (SOA) that will span its various and sundry product lines. "It does not make sense to run several architectures," Tognoni said. As it extends existing software under its emerging SOA, Made2Manage will identify chunks of functionality that suit more horizontal business processes, which can then be utilized across various software lines. Such composites will also be used to help Made2Manage penetrate new niche markets, Tognoni added.
"It's like a car manufacturer looking for ways to make multiple lines of cars: You need to have some common parts; it only makes sense," he explained.
Tognoni said Made2Manage identified AXIS as an acquisition target last year, but only recently closed in on the deal. "We did not want to raise money and not use it," he declared.
And Made2Manage expects to again put its cash horde to good use in the near term, Tognoni promised. The company, which was taken private in August 2003 by Boston-based equity financier Battery Ventures, has an extensive list of potential acquisition candidates, although Tognoni would not reveal his hand. "I would not be surprised if we would be talking [about another acquisition] ... very soon."