Thursday, June 6, 2013

How much business is PlanSwift doing and what price did Textura pay for PlanSwift's business?

Caution, long-winded blog-post!

This blog-post is not about Textura, per se, but about “PlanSwift”, a company most reprographers are familiar with and one that was acquired by Textura in early 2013.  This blog-post shares with our blog-visitors information about PlanSwift’s business and, in particular, reveals how much Textura paid for PlanSwift.
On February 14th, 2013, I posted a note on the Repro 101 Blog entitled, “Textura Acquires PlanSwift”.  If you wish to read that previous blog-post, you can access it by signing on the the IRgA web-site (at, then go to the Repro 101 Blog, then enter “PlanSwift” in the search box, or you can access it by clicking on the link immediately below, then scroll to blog-post (on Feb 14th) that was Textura’s Press Release about its acquisition of PlanSwift.
I attended the ERA Convention that was held in Hilton Head, SC in the fall of 2011.  That ERA Convention had a mini trade show, and PlanSwift was one of the exhibitors.  I had heard of PlanSwift before that, but that was the first time I had had an opportunity to meet anyone from PlanSwift.
If you are not familiar with PlanSwift, here’s a link to PlanSwift’s web-site:
One of the testimonials (among many) from a PlanSwift user says this:
“Eliminating the hassle of handling the printed plans is a huge benefit and time saver”.
At the bottom of the testimonials page, PlanSwift says this:
PlanSwift takeoff software, estimating software is the most widely used takeoff software in the construction industry, with the price of construction materials now days it make sense to get the best estimate possible. The days of manually doing takeoffs are in the past, jobs come fast with furious deadlines for quotes, using our software will allow you to quote more jobs faster with accurate pricing according to your digital takeoffs hence leading to less waste, more income, and a better bottom line.
The deep recession experienced by the A/E/C Industry, and by Reprographers as well, was caused by a financial crisis that led to a virtual halt (or, at the very least, a huge slowdown) in A/E/C Industry activity.  Reprographer revenues from printing plans on paper (and specs as well) took a nose dive.  But as we Reprographers know, A/E/C customer adoption - of technology products and services which enable “less printing” - has grown, continues to grow and will continue to grow in the future.  More and more Reprographers are reporting that their A/E/C customers are “printing less per project.”  When an A/E/C customer adopts “digital take-off” as the business process for estimating the cost to build projects (general contractors and sub-contractors all have estimating departments), that means that there won’t be as many sets printed as there were before the digital take-off method was adopted.
PlanSwift’s business is expected to grow and it fit interestingly well with Textura’s “construction project management offerings”, hence the reason why Textura acquired PlanSwift.
I took the time to read Textura’s S-1 Statement to find out how much business PlanSwift brought to Textura’s table and to find out how Textura paid for PlanSwift.  I was pretty sure that that information would appear in Textura’s S-1 …. and it was.
Note this paragraph at the beginning of the S-1 document:
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Okay, here we go with the details, and please note that this information does not appear in any particular order.
All of the information below comes directly from this document:  “Amendment No. 4 to Form S-1 REGISTRATION STATEMENT”.  Evidently, this document was filed with the SEC on June 5th, 2013.
Our revenue growth (this refers to Textura’s growth) has been driven by an increase in the number of construction projects being managed on our solutions, the aggregate client-reported construction value of such projects, and the number of organizations using our solutions. In addition, the acquisitions of GradeBeam and Submittal Exchange contributed to our revenue growth in fiscal 2012 and the acquisition of PlanSwift contributed to our growth in the second quarter of fiscal 2013.
Our acquisition of PlanSwift on January 31, 2013 generated $1.0 million of revenue (and increased the number of organizations by 1,673) in the six months ended March 31, 2013.
In another part of the S-1 it says this:
In order to generate an accurate bid for construction work, the plan drawings must be reviewed and an accurate determination of dimensions, such as the length and height of a wall or the square footage of an area, and of units, such as the number of electrical outlets, must be made. This process is referred to as take-off. Prices per unit, wastage rates, and other factors can then be applied to take-off results, and by adding other costs such as labor, overhead and other items, a complete estimate of the cost of the work to be performed can be obtained.
PlanSwift provides advanced functionality that enables users to perform complex take-off tasks from digital plans, and to use the quantities thus determined as the basis for estimation of material, labor, and other costs associated with a project. This approach replaces and improves the traditional method of manual measurement and unit count from printed plans and the use of paper or spreadsheet-based methods for estimating costs. Take-off and estimating is an activity performed by subcontractors, material suppliers, manufacturers, and general contractors.
In another part of the S-1 it says this:
In addition, PlanSwift competes with several take-off and estimating solution providers including On Center Software, eTakeoff and Cloud Takeoff; trade-specific take- off solutions such as ConEst (for electrical trades); and the estimating capabilities or modules of enterprise resource planning solutions such as Viewpoint, the Sage family of products, CMiC Open Enterprise and eCMS.
In another part of the S-1, it says this:

On January 31, 2013, the Company acquired certain assets and assumed certain liabilities of PlanSwift, LLC ("PlanSwift"). PlanSwift is a developer and distributor of software with take-off and estimating capabilities for use in the construction industry. Its solutions expand the Company's suite of solutions, especially in the bid estimation process.
A summary of the purchase price for the acquisition is as follows:
(Note, I've added three zeros to the numbers)
Cash consideration
Notes Payable to PlanSwift
Issuance of 539,000 shares of redeemable common stock


(Note, add three zeros to the numbers in this paragraph)
The purchase price remains subject to a customary post-closing working capital adjustment payable in cash, and 81 of the shares issued at the closing are subject to an escrow arrangement for a period of 18 months after the closing for purposes of indemnification claims by the Company against PlanSwift under the acquisition agreement. The notes are payable in two equal installments on June 28, 2013 and December 31, 2013, or upon completion of an initial public offering. Within ten business days following the completion of an initial public offering, one unitholder of PlanSwift has the right to require the Company to repurchase $1,500 of stock of the Company (based upon the price at which shares are offered in the offering) that was issued in connection with the PlanSwift acquisition. In addition, in August 2013, August 2014 and August 2015, PlanSwift (or the unitholders of PlanSwift, if the shares are distributed to them) has the right to redeem, on each such date, up to one-third of the shares of common stock issued to PlanSwift in exchange for a non-interest bearing note payable if the Company does not complete a qualified initial public offering (one which results in the shares of common stock being listed on the New York Stock Exchange or similar exchange) by such date. The fair value of the common shares issued to PlanSwift on the acquisition date are classified outside of stockholders' deficit as of March 31, 2013, and if the shares are not redeemed, it will be reclassified to stockholders' deficit as the redemption option lapses over a two and a half year period or as a result of the completion of a qualified initial public offering.
The fair value of the redeemable common stock issued to PlanSwift was comprised of the fair value per share of the Company's common stock as of January 31, 2013 of $14.24 and the value attributable to the redemption feature of $226. Using the Probability Weighted Expected Result Method ("PWERM") methodology, the value of the Company's common stock was estimated based upon analysis of the Company assuming various future outcomes, including an initial public offering at various dates, a sale of the Company, as well as the continuation of the Company as a private enterprise. The fair value per common share was based upon the probability-weighted present value of these expected outcomes, as well as the rights of each class of preferred stock, common stock, convertible debentures, options and warrants. The fair value of the redemption feature was determined by probability-weighting the fair value of the put right, as calculated under the Black-Scholes model, for each scenario contemplated in the PWERM analysis.
The total purchase price has been allocated as follows:
(Note, I've added three zeros to the numbers)
Identifiable intangible assets
Deferred revenue
Other current assets (liabilities), net
Net assets acquired

The Company believes the goodwill reflects its expectations related to economies of scale and leveraging of the PlanSwift solution with existing and future solution offerings. Goodwill is deductible for tax purposes. Identifiable intangible assets consist primarily of technology and customer relationships, which are being amortized over a period of three and five years, respectively.
Revenue of $994 and a net loss of $10 related to the PlanSwift acquisition are included in the Company's results of operations from January 31, 2013. The Company has not disclosed pro forma information related to the PlanSwift acquisition because this information cannot be prepared without unreasonable effort.
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Blog Publisher’s two final comments:

As to PlanSwift’s sales:

The “SELECTED CONSOLIDATED FINANCIAL DATA” in the S-1 sets forth Textura’s “sales for the six month period ending March 31, 2013”

In a “note” one page later, it says, “the acquisition of PlanSwift contributed $1.0 million of revenue for the six months ended March 31, 2013.”

And, in one of the paragraphs on the page that shows the allocation of the purchase price paid by Textura for PlanSwift, it says this, “Revenue of $994(,000) and a net loss of $10(,000) related to the PlanSwift acquisition are included in the Company's results of operations from January 31, 2013.”

The PlanSwift acquisition was effective January 31, so it looks like PlanSwift’s sales revenues for the two month period Feb 1 through Mar 31 were $1.0 million, meaning revenues of around $500k per month.

So, unless I’ve misread something, it “looks like” Textura paid $10 mil for a business (PlanSwift’s business) that was generating around $6 million in annualized revenues, and it also looks like PlanSwift was operating around breakeven.

Textura’s S-1 Registration Statement:

As to the S-1 I pulled the information from for today’s blog-post, I’ve stored a copy of it in my Google Docs Library, so, if you want to look through the S-1, you can click on this link:  (it’s a large file, so you’ll have to give it time to load):

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