Digitalisation in the construction sector has long lagged behind that in other sectors. But the sector has been catching up, particularly since the start of the Covid pandemic. Digitalisation and automation of business processes enhance efficiency, and construction software, also known as craft software, plays an important role in this.
Construction software makes business processes and operation management easier and more efficient, and is used to draft project and construction plans, generate quotations, send invoices, create and process work orders and order products from wholesalers. Tablets or smartphones provide easy access to the software on site.
There are a number of reasons why the construction sector is catching up. First of all, the availability of software and applications has increased tremendously. While construction software is a niche within the overall software market, there are different software platforms serving different target groups with software packs for all sorts of construction business, from housing associations, installation companies, architects’ firms, landscaping businesses to a range of smaller businesses, independent contractors and self-employed professionals.
Secondly, these developments meet complex challenges facing the sector. Demand for skilled and professional staff has risen exponentially due to the housing crisis and energy transition efforts. Also, there is a shortage of raw materials, putting extra pressure on entrepreneurs to manage building projects and use materials efficiently to be able to retain margins.
There is a simple explanation why entrepreneurs and investors are now taking an interest in construction software businesses, with more mergers and acquisitions as a result. Market growth and higher demand will drive the construction sector and increase the number of potential clients. Housing shortages and energy transition efforts will boost the sector even more. Also, many construction companies remain to be digitalised. Private equity is recognising the sector’s potential.
There is another reason why the number of M&A deals in the construction software sector has grown by 25% in the Netherlands and Belgium. That is because the construction sector is predominantly a local industry with software carefully geared towards local rules and regulations, to allow for differences such as those in dimension tables used by Dutch and Flemish architects, for instance. International businesses are therefore taking over local software businesses to gain access to local market and regulations expertise as well as end users. Moreover, acquisitions are an efficient way for entrepreneurs looking to expand their product portfolio and take onboard new and specialist expertise.
The construction sector and related software are booming. The market is growing and demand is up. We expect this to continue over the next few years, resulting in demand for and supply of construction software, increased digitalisation in the construction sector and an efficiency drive that enables sustainable operations and cost reductions. The construction and software sector will benefit as a result.
With decades of experience guiding mergers and acquisitions in the software and IT sectors, CFI acts as strategic business partner to software and IT entrepreneurs and investors wanting to grow or sell. We are committed to work with you to achieve the best possible deal for your business.