ECi Software Solutions has announced the acquisition of American Management Enterprises, which trades as Mark Systems. Based in Mt Holly, NJ. Mark Systems produces IHMS, an ERP solution for home builders.
Smart purchase by ECi
The purchase will see ECi bring together the home building ERP solution with their lumber and building materials software. At present there seems to be no integration between the two applications. If they can build an integrated platform this could provide a significant competitive advantage.
Scott Duman, President and CEO of Mark Systems will head up ECI’s Residential Construction Group as President. This will form part of the Building and Construction division. The combined company will have more than 3,200 customers in the lumber, building and construction, and hardware industries.
Duman commented: “After getting to know ECi, it quickly became evident that their values aligned with ours; their standard of excellence is what we want to achieve. They focus on delivering innovative products and maintaining high levels of customer satisfaction. We believe joining ECi will give us the ability to leverage our strengths to bring even more value to residential homebuilders.”
At the right or wrong time?
According to Ibisworld the homebuilder market has grown by 9.7%, its fastest since the housing boom in the early noughties. ECi will hope that this trend continues, despite the recent dip of 18.7% in November according to Reuters. If that dip is a mere minor adjustment then this could become an excellent acquisition if ECi can leverage it properly.
Ron Books, Chief Executive Officer of ECi said: “The residential homebuilder market has been growing steadily since the late 2000s and housing starts continue to project positively. We have lumber and building materials software platforms (Spruce and Advantage software) that serve the supply side of the construction market, and have explored the demand side for some time. The addition of Mark Systems makes ECi a leader in the residential home construction sector and enables us to investigate innovative ways to connect homebuilders with their LBM suppliers. Mark Systems is a very well-run company and we are honored to have them as part of the ECi family.”
If ECI can create a platform in which both homebuyers and LBM providers can share information, order tracking and other items then they will have a competitive advantage.
There is little in the press release to indicate the strategy which ECi will follow after the acquisition. There will be cost savings in the normal synergies of the acquisition. However ECi needs to create a bridge between the two pieces of software. For homebuilders this could provide a means by which they can rapidly and efficiently source materials in a cost efficient manner. For the LBM industry it allows them to directly connect to their customers. If ECi can create a large enough market place for these suppliers and customer it could attract a new set of customers.
LBM suppliers could become channel partners for ECi, helping to sell the software that there customers need to use. It will also help to draw new LBM suppliers to ECi. LBM suppliers could find their customers choosing competitors over them because of the integration. This is why ECi needs to rapidly integrate the two sets of software and deliver an advantage to both parties.
No financial details were disclosed in the press release. As Mark Systems was privately owned previously it is hard to estimate the selling price. If ECi manages to leverage this acquisition quickly can it start winning more deals from competitors such as Epicor? It may also hinder K8’s expansion in the US market following its early success by Dancik.