It was my first day of work in 2013. I was just back from my year end vacation and ready to roll up my sleeves and plunge into another exciting year in the CAM business when I heard that Vero International had just announced the acquisition of Sescoi International. Even before the dust had settled down in this acquisition, Vero announced that it is acquiring the SURFCAM assets from Surfware Inc. on Feb 7th. It looks like 2013 is going to be a very interesting year for all of us who are involved in CAM.
Something that caught my attention is that the nature of these two acquisitions is quite different. If you read the two relevant press releases carefully you will notice that Vero acquires Sescoi International the company, but only the SurfCAM assets of Surfware. Surfware will continue operating as a separate entity called TrueMILL Inc. The second acquisition is of the same lines as Vero’s acquisition of Machining Strategist way back in 2002. It looks like the people at Surfware want to remain independent and continue developing software for the CAM industry and have not been assimilated into Vero. Vero seems to be buying the brand SurfCAM.
With these acquisitions, is the newly consolidated entity greater than the sum of its parts? From a technology standpoint, I am not sure if Vero is gaining much. Sescoi’s flagship product is WorkNC, a CAM product focused on the mold and die market. Vero already has Visi, a product focused – yes you guessed right – on the mold and die market. Furthermore with its earlier acquisition of assets of Machining Strategist, another company that was focused on the mold and die market, it seems to me that there is a lot of overlap between the technology that Vero already owns what Sescoi has to offer. Now with the acquisition of SurfCAM, Vero gets the TrueMILL technology from Surfware, the SurfCAM brand and not much else.
So what gives? Companies acquire other companies for various reasons, chief among them are diversification and growth. Since we can rule out diversification in this case, the only thing that I can conclude is that Vero has exhausted its ability to grow organically and needs these acquisitions in order to meet its growth targets. Vero is on the path to becoming the behemoth with sales revenue in 2011 around $70 million. This will make it the 3rd largest CAM vendor behind Dassault Systems and Siemens PLM Software. It looks like the bean counters are at work here.
Is there a consolidation going on in the CAM industry? In the past three months, three CAM companies have ceased to exist as independent entities. This represents a 6-7% drop in the number of CAM companies worldwide. Hardly a consolidation – maybe a mini-consolidation. And maybe it is a harbinger of things to come. Something to watch out for in this year is to see if any of the other larger players get sucked into this M&A game. Yes it sure looks like 2013 is going to be very interesting year for all of us involved in CAM. See you on the other side!