Textura Corporation Acquires LATISTA

On Thursday, after the markets closed, Textura announced that it acquired LATISTA for $35 million in cash; the deal is expected to close on December 2. LATISTA provides in‐the‐field project management applications, such as punch lists and document management. The company has a similar business model to Textura, as it charges general contractors based on the total construction value of projects that are using the solution. The average fee is about five basis points of construction value and contracts are typically annual or multiyear subscriptions.

The solution can take four days to five days to be implemented for small clients and four weeks to six weeks for larger clients. LATISTA is expected to have calendar 2013 bookings of about $5.1 million to $5.5 million, representing 80%‐90% growth, with about 90% of these bookings from U.S.‐ based customers. LATISTA’s closest competitor is Vela Systems, which was purchased by Autodesk (ADSK $43.99) last year. The company has been on management’s radar for some time, and the bidding process was competitive, although LATISTA management realized early in the process that Textura was the best fit from a strategic standpoint.

The acquisition is a nice addition to Textura’s product portfolio and provides multiple growth opportunities. The companies should be able to generate cross‐sell between the customer bases, as there are many clients that are not shared between the two companies. Management believes that there are some Textura clients where the LATISTA solution can be immediately introduced. In addition, the LATISTA solution could help the company create inroads to new customers because it is a compelling and visually appealing solution.

The purchase also gives Textura an entrance into the Russian construction market since about one‐half of LATISTA’s 52 employees are located there, including a couple sales reps. Finally, over the longer term, we believe that Textura has the opportunity to increase the monetization of LATISTA through reworking the pricing to receive fees from every participant in the construction process, similar to what it does with its CPM solution. Currently, only the general contractor pays a fee for the use of LATISTA.