Dive Brief:

• Autodesk announced yesterday that it signed a definitive agreement to acquire construction software company PlanGrid for $875 million net of cash. 
• The transaction is expected to close during Autodesk’s fourth quarter of fiscal 2019, ending Jan. 31, 2019, and is subject to customary closing conditions. Autodesk expects the PlanGrid integration to contribute slightly to revenue in the fourth quarter and to be modestly negative for profitability and cashflows. In fiscal year 2020, Autodesk forecasts PlanGrid to contribute about $100 million in average rate of return and be slightly dilutive to profitability and cash flow.
• “There is a huge opportunity to streamline all aspects of construction through digitization and automation," Autodesk CEO Andrew Anagnost said, adding that the acts of designing and making things continue to work more in tandem. "The acquisition of PlanGrid will accelerate our efforts to improve construction workflows for every stakeholder in the construction process.”

Dive Insight:

PlanGrid has made huge inroads in the construction industry in a relatively short time following its formation in San Francisco by Tracy Young, Ralph Gootee, Ryan Sutton-Gee, Kenny Stone and Antoine Hersen in 2011 for the purpose of developing an app so that field workers could view building plans on mobile devices. CEO Young told Construction Dive it was about being in the right place at the right time.

“The cloud was becoming more popular, stack software was taking over the enterprise, and then Steve Jobs announced the first-generation iPad,” she said. “These three things together made PlanGrid possible, and so we quit our jobs to build it.”

Its first 40 users were former colleagues of the founders. But PlanGrid started to catch more peoples’ eyes and today the software can be pegged to more than 1 million projects across 90 countries, including such iconic projects as Hudson Yards in New York and the Comcast Innovation Tower in Philadelphia. Deloitte ranked PlanGrid the 143rd fastest-growing company in North America on its 2018 Technology Fast 500 list.

Construction software giant Autodesk was one such company taking notice of PlanGrid. Jim Lynch, vice president and general manager of Autodesk’s Construction Business Unit, told Construction Dive that when Andrew Anagnost became CEO of Autodesk in 2017, he viewed the construction side as the "next big opportunity" and gave special focus to the business segment. A big part of that initiative was accelerating efforts in the field, which is where PlanGrid has had so much success. 

"We wanted to accelerate our efforts in the field and we saw PlanGrid. The team has done an amazing job capturing the hearts and minds of teams out in the field and we thought it was a great fit from a technology and cultural perspective," Lynch said. "Everything just pointed in the direction of, 'let's do an acquisition.'" 

In a presentation accompanying the announcement, Autodesk cited the following rationale for acquiring PlanGrid, which will retain its name. Lynch says the business will be kept whole to "continue on the great trajectory they're on":

• Immediate scale and presence in construction. PlanGrid has about 12,000 customers and 120,000 paid users.
• Construction expertise and strong research and development. PlanGrid brings 400 employees, the majority of whom are in research and development, sales and marketing.
• Complements Autodesk Revit and BIM 360. Integration of Autodesk products and PlanGrid will result in a smoother exchange of project information to all project members.
• Compelling synergies, such as Autodesk’s ability to grow internationally and growth opportunities with subcontractors and owners.

Young, who, reporting to Lynch, will continue to lead the PlanGrid team, said her team is electric with excitement and that the synergies between the two companies are "so obvious. It's crazy it's taken us this long to work together," she said. "This will completely change the construction technology landscape. One of the foundational problems of the industry is the disconnect between people designing and building structures. A lot of efficiency can be gained if we can get the project and design information to the field faster."

Lynch and Young agree that combining the two companies' expertise and solutions will positively change the way office and field workers collaborate and ultimately boost productivity, communication and information distribution while eliminating some challenges in construction. "Making sure people have the right information at the right time will take care of a lot of the problem," Young said.