Over the last five years, the geospatial industry has seen steady growth in both M&As and partnerships, with 2018 marking the peak of the two business trends. However, in 2019, the industry witnessed more partnerships than acquisitions, signaling a shift towards collaboration.
Mergers and Acquisitions (M&As) and partnerships are essential for business growth. Apart from market expansion, domain consolidation, portfolio diversification, capacity augmentation and corporate restructuring, M&As and partnerships help an enterprise in keeping up with the changing business trends. They are also crucial for ramping up innovativeness and infusing dynamism to cater to increasing customer expectations and industry demands.
Over the last five years, the professional geospatial industry has seen steady growth in both M&As and partnerships, with 2018 marking the peak of the two business trends. However, in 2019, the industry witnessed more partnerships than acquisitions, signalling a shift towards collaboration. The year saw a slight dip in the number of partnerships as compared to 2018 — 153 to 136, while there was a sharp fall in the number of acquisitions —72 to 41.
Trends in M&As and partnerships
There has also been a major shift away from the traditional geospatial-dependent sectors to other sectors that utilize geospatial technologies. For the sake of the readers’ clarity, we have divided the industry into three parts: Professional Geospatial Market (PGM), which includes national mapping agencies, thematic mapping organizations and commercial companies; Location Analytics and Business Intelligence (LA&BI); and Architecture, Engineering and Construction (AEC). In 2019, while the number of partnerships remained steady in all three segments, there was a noticeable decline in M&As.
Factors driving M&As and partnerships
Product/service enrichment: M&As and partnerships are mostly carried out by companies to enrich their products and services. For example, Here Maps partnered with Blis to enrich data-driven insights through location analytics. Similarly, Maxar, a leading NewSpace and geospatial analytics company, partnered with Vulcan to support domain awareness systems.
- Portfolio diversification: A company’s decision to diversify its portfolio often takes it on the path of acquisition. For example, FourSquare, one of the leading location platforms, expanded its market base by acquiring its former competitor Placed. Acquisition of Geographica by CARTO was another example of the confluence of geospatial and Location Intelligence.
- Geographic expansion: Companies acquire or partner with other players to expand their geographic reach, growth and access to new markets and talent pool. For example, Trimble acquired fleet management company Veltec to step into a new market for its fleet safety and efficiency solutions.
- Vertical/workflow integration: Integration of workflow is another reason for partnerships. For example, Esri, the world’s leading Location Intelligence company, joined hands with Intel-owned autonomous driving startup Mobileye for enhancing its data collection capability and getting real-time updates for dynamic edge mapping. Bentley Systems forged a partnership with Microsoft 365 to automate its BIM workflow.
- Integrating business analytics: Geospatial companies team up with several IT or analytics firms to leverage their analytical capabilities. For example, Near, a leading Location Intelligence platform, partnered with Oracle’s BlueKai Marketplace to make their data available to the global audience.
- Collaboration with user industries: Partnerships are mostly forged with user industries. For example, TomTom partnered with NVIDIA to build a Cloud-to-Car mapping system using Artificial Intelligence. Orbital Insight and RBC Capital Markets decided to work together to develop future geospatial analytics products.
Major Industry Trends
An analysis of the top 13 companies in all three segments suggests that in the Professional Geospatial Market, most M&As and partnerships from 2018 to 2019 were done by hardware companies, followed by services, software and solution firms. Hardware companies such as Trimble, Hexagon and Terra Drone Corporation continued to acquire companies to expand geographic reach, diversify portfolio and enrich products and services.
In the LA&BI segment, most M&As and partnerships from 2018 to 2019 were done by content companies, followed by software and platform firms. Companies like Salesforce acquired MapAnything, a location-based service company to incorporate map-based visualization, asset tracking and route optimization to improve productivity for field sales and service teams, and provide a better customer experience.
In the AEC space, majority of big companies like Trimble, Topcon Positioning, FARO and Autodesk forged partnerships to enhance their software solutions by integrating geospatial information systems and 3D modeling software.
Professional Geospatial Market (PGM)
In the PGM segment, as compared to 2018, 2019 saw a nearly 50% decline in M&As (23-12). However, there was a slight increase in partnerships (39-40). Most partnerships were forged in vertical/workflow integration, while acquisitions were made for portfolio diversification.
Interestingly, M&As among hardware and solution companies dropped significantly, as compared to the previous year. However, among services and software companies, M&As remained the same. In partnerships, software companies occupied a large space, while service companies too seemed to be taking a leap.
Location Analytics & Business Intelligence (LA&BI)
In the Location Analytics & Business Intelligence segment, partnerships were more conspicuous than M&As, although there was a decline in both. While the M&As mostly focused on portfolio diversification, partnerships were forged between companies to collaborate with user industries and to enrich products/services. In 2019, most partnerships were done by platform companies, as against content companies a year ago.
Also, there were several collaborations between location and IT companies.
One common trend observed in the last five years (2014 to 2019) is that of M&As happening among platform and solutions-based companies. Although in 2017 and 2018, content-based companies too occupied a large space, their share was insignificant in 2019.
In partnerships too, platform companies occupied the maximum space in 2017, while in 2018, it was dominated by content companies. Interestingly, 2019 again saw a surge in the share of platform companies.
Meanwhile, content companies such as Here Technologies and Mapbox continued to forge partnerships with user industries to deliver the most powerful geospatial solutions to improve connected mobility and provide real-time asset tracking. Companies like Here Maps, PlaceIQ and Factual forged the maximum number of partnerships in 2018 and 2019. Cuebiq, a consumer insights and measurement company, did major partnerships in the OTT platform and out of home advertising segment.
Architecture, Engineering and Construction (AEC)
In the AEC segment, 2019 was a year of consolidation. Majority of big companies like Trimble, Topcon Positioning, FARO, Oracle, Autodesk, Bentley Systems, etc. focused on enhancing their software solutions by integrating geospatial information systems and 3D modeling software.
The number of M&As dropped from 36 in 2018 to 20 in 2019, while the number of partnerships decreased from 46 to 32. Companies like Autodesk, Bentley and Aspen Technology entered into strategic partnerships with the likes of Unity and Microsoft to embed business analytics capabilities in their product portfolios.
The partnership between Autodesk and Topcon Positioning, for instance, enabled project owners and construction companies to form a seamless connection between the office and field to increase on-site worker productivity and overall quality and safety. Autodesk also strengthened its collaboration with Leica Geosystems to bring new efficiencies in building construction.
With mounting economic and geopolitical uncertainties posing new challenges, last year saw a fall in M&As. Also, the broader industry focus, which revolved around portfolio diversification till a couple of years ago, shifted towards product/service enrichment and workflow integration, leading to more partnerships across segments. With companies targeting technology upgradation and better outreach, the industry seems to be gearing up for an impending disruption.