French software company Dassault Systèmes SE is buying manufacturing software provider IQMS Inc. for $425 million in cash.
Under the agreement, Paso Robles, Calif.-based IQMS will become a wholly owned subsidiary of Dassault Systèmes. The transaction is expected to close in early 2019.
IQMS was owned by TCV, or Technology Crossover Ventures, a private equity and venture capital firm that boasts investments in big name brands such as Netflix and Airbnb.
IQMS provides enterprise resource planning (ERP) and manufacturing execution system software to companies serving the automotive, industrial equipment, medical device, packaging and consumer goods industries. IQMS customers include plastics processors such as injection molders, compounders, thermoformers and extruders.
Gary Nemmers will remain president and CEO of IQMS, and no material changes to the company will be made.
“It's a win-win situation,” IQMS Chief Marketing Officer Steve Bieszczat said in a Dec. 12 phone interview. “From Dassault's standpoint, they have a complete portfolio of manufacturing technology solutions and … one of the opportunities in their portfolio was for a midmarket ERP company that was focused on manufacturing, and we'll take that spot.”
IQMS employs around 300 in total — between 180-200 at its Paso Robles headquarters and the rest in seven additional locations across the United States, Europe, Asia, Canada and Mexico. The company reported sales of about $56 million in 2017.
Dassault Systèmes specializes in 3D design, engineering, modeling and simulation software as part of its 3DExperience platform. The company said the acquisition of IQMS will allow it to extend the 3DExperience platform, which includes the SolidWorks line of 3D computer-aided design tools, to small and mid-sized manufacturers — specifically, those with annual sales between $10 million-$250 million.
The manufacturing ERP midmarket is estimated at $5 billion, with a 7-8 percent annual growth rate through 2023, according to a Dec. 11 news release from Dassault Systèmes.
“As of today, two-thirds of IQMS customers are already SolidWorks customers,” Hadrien Szigeti, who works in manufacturing, supply chain and corporate development at Dassault Systèmes, said in an emailed response to Plastics News.
SolidWorks can help mold makers build molds correctly the first time, Szigeti said, while injection molding simulation can help predict and prevent manufacturing defects in plastic parts and injection molded designs, he said.
“Access to the SolidWorks customer base is a good thing for IQMS because the products are … noncompetitive,” Bieszczat said. “They don't overlap, but they're highly complementary.”
Going forward, Bieszczat said manufacturers can expect greater integration to the design capabilities of SolidWorks and the manufacturing capabilities of IQMS.
“If you can integrate those two functions from a data and process standpoint, that's a really good thing for a manufacturer,” he said.
Dassault Systèmes has headquarters in Vélizy-Villacoublay, France, a southwestern suburb of Paris, and employs more than 15,000 globally. The company reported sales of approximately 3.2 billion euros ($3.6 billion) in 2017.