Transcript 0:00 [upbeat music] Welcome back to The Peggy Smedley Show, your voice for our connected world, with your host, Peggy Smedley. [upbeat music] Hello, listeners. Welcome to today's edition of The Peggy Smedley Show. 0:17 I'm gonna have so much fun with you today. I'm your host, Peggy Smedley. Today, we're talking about M&As, otherwise known as mergers and acquisitions. 0:25 So today on the show, we're gonna talk all about mergers and acquisitions, more specifically those in construction technology space, and the impact on the industry overall. 0:36 One trend I think I'm seeing in M&As aren't just about buying companies. 0:41 They might seem simply about the bottom line, but in many cases, they're about accelerating transformation, maybe through strategic deal-making, as we always talk about. 0:53 And I wanna really talk about what that means in this first segment, how construction technology, and often software players, are in the midst of all this wave of consolidation. 1:05 Over the years, if you've ever read my blog or seen me talk on this show, I talk a lot about what that means. So in this first segment, I will share four key trends that are driving all of this. 1:17 One example I will really dive into, and my thoughts on how to proceed in this year ahead, what we're gonna see in 2026. 1:25 But before we get into this topic, let me tell you about the guests I'll be interviewing on the show a little bit later. I'm gonna be welcoming Boris Martin. What a really wonderful gentleman. 1:36 He is the CEO of Engineers Without Borders USA. 1:40 Now, Engineers Without Borders USA is really a wonderful nonprofit organization that partners with communities to design, and many of you might know, sustainable infrastructure solutions while preparing that next generation of leaders. 1:56 Now, I love this, because I'm all about the future of work, and we're, he's gonna join the show to discuss how organizations have partnered with others and how you as the next generation might get involved. 2:10 And we're gonna really dig into how to prepare you or others in this next generation of workers. And then I'm gonna wrap up the show welcoming back Daniel Burrus. 2:23 Now, he's a global technology futurist, a business strategist, disruptive innovations expert. 2:29 He's all kinds of things, but he returns to the show, and it's been a while, to talk about three emerging trends he thinks are gonna disrupt in 2026. 2:39 And he's gonna share kind of his candid thoughts with me about what comes next with technologies and how companies can best prepare. So I hope you'll stick around. 2:49 These are gonna be amazing conversations, and I'm excited to have these two great guests on my show. But first, let's get started talking about M&As in the construction industry. 3:00 So start with me, journey back with, as I always like to say, the past couple of decades. 3:06 If you've been around in the industry, as I mentioned at the start of the show, then you know construction is a fragmented industry. Now, we've seen thousands of small companies operating pretty much in silos. 3:21 Nothing surprising to hear me talk about that. And we've seen different software systems, disconnected data, long project cycles. In the late 1990s, investors poured their capital into internet startups. 3:37 Early in the 19... I'd say early, let's say 2000s maybe. I was gonna say late 1990s, but maybe it was more 2000s. The bubble burst. 3:48 And I think of the example of the Buildnet kind of example, which is specific to the construction industry. 3:57 The company raised millions of venture capital and acquired several traditional construction firms, and then the bubble just burst, and that company went literally belly up. 4:10 Now, it's a cautionary tale when we think about it, but we're in a very different times today when we think about AI, and we think about all these different things. 4:21 But if you go back, when we talk about the dot-com era, or we talk about the internet bubble bursting, there were a lot of things that kind of had to happen or didn't happen or whatever occurred then, that was different. 4:36 But if we look today, many technology companies are looking to eliminate all of those silos that existed back then when companies made those acquisitions. 4:46 Today, these silos are a little bit maybe different, and these silos that are today, that we talk about, there are many multiple forces at play that are leading to more of a different merger and acquisition reasoning. 5:03 Okay? So if you're following along here, the way I'm trying to explain it. But let's explore four big trends that are leading to mergers and acquisitions today. 5:13 The first big trend we're seeing is in digital transformation is no longer optional. We know that. 5:21 Construction companies have realized if they want to reduce costs and deliver projects on time and complete bigger and more complex jobs, then they absolutely need technology. There's no if, ands, or buts about it. 5:35 They need data-driven workflows. That's not a question. That's a reality. For technology companies, M&As are becoming a vehicle for delivering these digital tools to the construction companies, to the job sites. 5:51 So we know that. 5:53 The second big trend is private equity firms, now this is what the really interesting part is, are recognizing the value now in construction technology, which might not have actually have happened-Maybe a couple decades ago. 6:08 Many are beginning to invest in the market and are investing in a very big way, and some have even acquired some of these companies. 6:18 Not just investing, they've acquired them because they see the value in what can happen. And this has driven value in construction software much higher. 6:28 So investors and tech companies alike recognize the opportunities to modernize historically fragmented industry. So we're seeing some really big shifts there that were not known a couple decades ago, as I just said. 6:46 Now, the third big trend here that we need to look at is in construction technology, M&A is often cyclical, so we need to look at this. 6:54 So like the construction industry in general, the M&A market, and specifically in construction technology space, comes in waves. Sometimes faster than other times, but now it's faster than ever. 7:08 We're often have see- we see a spree where there are many acquisitions, and then there's this quiet period, and then a wave starts continuing, and it's just a flood of activity. 7:20 So currently, the cycles are faster than the past ones. Now, you might be asking me, "Why?" Digital transformation is speeding up and so are the acquisitions. 7:32 It's unbelievably fast, and if you're following this space, you understand why. 7:37 It seems like the pace of change continues to roll faster than it ever has in the past, and anybody listening to this, watching this, understands why. 7:49 And nothing is slowing down, and there's nothing that says it's going to slow down, so the pace of change, it just continues to speed up and speed up. 7:58 So now the fourth big trend that I wanna talk about is the data exchange is often... is too often too siloed. And tech companies want to solve this because they recognize siloed data is not a good thing. 8:12 So acquisitions, as I mentioned at the top of the show, is where it comes into play. 8:17 So many tech companies enter into strategic acquisition in order to enable customers to have better data flow and access to information. More information makes better, faster decisions. Everybody wins. 8:33 We do things better, faster, quicker, easier. That's the ultimate hope. While there are many acquisitions to consider in construction, the technology space is starting to see what happens. 8:45 So let's consider one example, which is what I wanna talk about right now. Bentley Systems, this is a great one, announced the acquisitions of Talon, Aero- Aerolytix, and Pointevo. 8:57 Now, these are two different companies, but they closed in December, and to strengthen Bentley's assi- asset analytics portfolio. So we wanna talk about this. 9:08 The new a- acquisitions extend Bentley's offering in both telecommunications and the elec- electric utilities, okay? 9:15 Enabling ini- integrated digital workflows that support global, I think, 5D deployment and grid modernization. 9:24 And I think what's so important about this, if you know what Bentley's been doing, Bentley has been building up its portfolio in many ways. 9:32 Some ways it builds it, some ways it acquires it, and it does a lot of different things to be able to say what it wants to do. 9:38 Now, Talon, what's interesting, it provides solutions for site surveys, inspections, asset digitization across wireless, telecom, broadband, and electric utilities. 9:49 Now, its platform combines workflow automation, digital twins, AI, enabling organizations to improve, I think, productivity and reoccurring tasks and inspections. 10:02 Now, the acquisition of Pointivio Technologies provides additional horizontal capabilities for Bentley's asset analytics, spanning, I think, drone data processing and AI-powered damage detection and geolocation. 10:21 Now, what's interesting here is these capabilities will further strengthen, which I think, Bentley's platform for AI-powered insights. And again, Bentley is taking a strong stance on the future of AI. 10:34 And again, if you look at what they're trying to do, they're looking at their entire platform. 10:40 And again, this is only one example of what many companies are trying to do, and some companies are doing it through merger and acquisition. Some are seeing they wanna build it. 10:51 But if they wanna do it faster and keep up with the pace of change, you can't do it all alone. In order to do it faster, you have to acquire it. What do you think they're doing? 11:02 They're trying to figure out, "How do you do it? I'm gonna acquire someone." That's what Bentley is trying to do. So let me share my opinion for today from a bigger scheme of things. 11:10 Merger and acquisitions can signal a fundamental shift, and I think they're done in a number of reasons and a number of ways. So here's a few things to include. 11:21 Reducing fragmentation, which we've just been talking about. Accelerating digital transformation in a large ways, in a large scope of ways. 11:30 Making project delivery more integrated, which I think is important because the impact on construction companies can really run the gamut, and I think we need to think about that. 11:40 So some companies ultimately experience better data flow across entire project life cycles, and we see that already. 11:49 Some are able to centralize procurement, scheduling, cost management, and the list goes on, and we've talked about this. Others are able to boost their competitiveness on large projects with integrated technology. 12:03 Now, if you're using construction technology today-I would say you proceed with the assumption there's always the chance it will be, I guess, the fact is it will be snatched up by some bigger bidder, right? 12:21 And that's what we've been talking about. Maybe not. But you have to think if it's a good piece of technology, somebody else is gonna want it. Looking to the days ahead, will that happen? I don't know. 12:36 But there's always the chance somebody bigger, better is gonna want it. We can expect the acquisition activity in the construction industry isn't gonna slow down any so- time soon, and it's only going to accelerate. 12:49 So there seems to be this race for being the technology leader in the construction space and the merger and acquisition idea as just one tool as a way to compete and to be very competitive. 13:05 So I guess if you wanted to ask, and this is the way I w- thought about this segment today, is who will really own the space? 13:13 And we've seen over the past couple of decades as I've been covering this space, it's a way of being the leader in the space. Who will have the knowledge about what comes next is the way the gamble is. 13:24 It's being a gambler, and that's exactly what you're doing. 13:27 You're betting on you have the best customers, you're betting on you know how to leverage the technology, and you're betting on where the technology should go and what customers are really gonna want the technology, and that's the trick. 13:40 So both in terms of innovation and the needs of the construction industry are, one, you better be a good gambler, and you better know, you know, how to play the game pretty well. 13:50 So I like what I'm seeing, like with Bentleigh Systems right now is one example. They're betting on a lot of movement in the space. They are looking at the... 14:00 playing all their cards and saying, "Look, we're betting on AI. We're trying to say, where do we need to go? What assets we need to build on, and what we need to acquire on." 14:10 And they're looking at it from all different perspectives. At the end of the day, acquisitions come in all shapes and sizes. 14:18 Doesn't necessarily have to be the biggest company, doesn't necessarily have to be the smallest company. It could be a combination of all of these. 14:25 So it seems many of the more recent ones we're looking at to fill a very specific need in the construction industry, which I find really intriguing, and it says it's filling very specific niches and needs in the marketplace. 14:39 So again, here's my tip for today. Consider your position in this M&A evolution. What role will you play or experience? Are you thinking about if you are a tech company or are you the acquirer? 14:53 Which is interesting all in and of itself. Why, what is the main objective? We think about the who, what, where, when, why kind of things in journalism, why would you in the acquisition kind of space? 15:05 If you are a construction company, how will you approach technology that is being acquired? Because it changes what you're thinking about doing in your strategy, in your technology adoption overall. 15:18 So how will you consider your tech strategies in the days ahead? 15:22 Because you need to think about that in the strategies you're thinking about for your company as you think about these projects and the solutions you are using to help you go down the road as you build. 15:34 So the reality is acquisitions will continue to happen, and they're gonna happen faster than slower at the rate we're seeing. It's a matter of how to think about them strategically in the days ahead. 15:46 All right, listeners, I'm out of time for this first segment, but we've got so much more to come. 15:51 So share your thoughts with me on Exit Connected World, or follow me on LinkedIn or on YouTube, and continue the conversation there. 15:57 Please check out our website at connectedworld.com, our show website at thepeggySmedleyShow.com. Make sure to share and subscribe to these episodes each week. I'd love to hear your thoughts. 16:07 This is The Peggy Smedley Show, your voice for our connected world. And remember, with great technology comes great responsibility. [upbeat music]
