Industrial Transition M&A: Rockwell Acquires Fiix
About a month ago I wrote about Rockwell’s M&A ambitions. That post can be found here. The theme of my research was that Rockwell has software ambitions and is specifically interested in bolstering their topline growth through M&A in 3 areas:
This week’s announcement that Rockwell is acquiring Fiix is another data point that Rockwell is committed to M&A in the areas they previously highlighted.
The Fiix Fit and Strategic Rationale within Rockwell Automation
Fiix is a developer of a cloud-based maintenance and asset management platform designed for companies to schedule, organize and track maintenance activities. The company’s platform mobilizes the maintenance workforce with a mobile experience and interfaces with enterprise software to connect the entire organization, enabling businesses to implement preventive maintenance strategies to increase production and decrease unplanned downtime.
Within the Rockwell framework, Fiix falls perfectly into the Digital Information Services target zone. Given how the Fiix platform also helps manage customer asset management and work orders throughout the product lifecycle, Fiix gives Rockwell reach into inventory management, product reordering and asset management intelligence.
Fiix previously indicated that the company grew topline revenues 70% in 2019 with more than 85% of that revenue being recurring revenue. It is also said Fiix has more than two million assets under management, with more than six million work orders each year. What makes Fiix so intriguing is that it is a multi-tenant SaaS offering that will be able to integrate other digital offerings into its’ core platform. This will allow the application to deliver other digital insights and products from Rockwell to the end-customer.
Rockwell had stated interest in acquiring up to $250M of software revenue and Fiix clearly is a great anchor within that framework. As detailed below, I suspect that Fiix will provide between $25-30M in near-term, annual software revenue to Rockwell.
The Fiix History
Fiix was founded in 2008 by Marc Castel and is headquartered in Toronto, Canada. The company was bootstrapped and capital efficient from 2008 until 2016, when Fiix raised a $5M Series A in January 2016. The Series A and the $12M Series B in 2018 were both led by BuildGroup. Canadian grants also helped capitalize the company’s earliest growth needs.
Alongside the Series B in 2018, James Novak became CEO and has held the title ever since. He was previously President of the company.
In June 2019 the company raised $40M in a Series C round led by Georgian Partners. Alongside that round Fiix acquired Alchemy IoT, an industrial intelligence asset company, adding AI to the startup’s maintenance and asset management software. The price for that acquisition was undisclosed, but Alchemy has raised $4M.
The Exit
Fiix was projected to have approximately $25-30M of revenue in 2020. Using AVEVA’s acquisition of OSIsoft as a comparable exit multiple, we should apply a 10-12x revenue multiple on the Fiix revenue. This implies an acquisition price range between $250M to $300M+/- in exit price. For sake of averages, I will estimate this is a $275M acquisition.
As prices are not disclosed on the earlier financings rounds it is hard to know the precise returns for each stage of the company. The Series A and Series B investments likely purchased BuildGroup ~35% of the company, yielding a nice return. If the 2019 Series C purchased a standard ~20% of the business, then the company had a post-$ value of $200M. A $250-300M exit would not be a homerun but a nice IRR.
Of note, however is that the company was founded in 2008 so it was 12 years to exit. But, interestingly, only 4 years from the Series A until this major financial milestone. It appears that the commercial scale truly ramped up with the Series A capital.
I have now updated the “Industrial Tech Exits” Google Doc with this deal. Found here
Note: all financial figures are $USD