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Insights 2019: Epicor targets “two or three” major acquisitions in 2019

CEO Steve Murphy considers using his £250m war chest to snap up more ERP products, but stresses the need to be thrifty

Business agreement

Epicor's CEO has hinted that his company is looking to complete up to three major acquisitions within the next 12 months to bolster its 50-plus product line.

In light of a steady inflow of revenue, the developers of industry-specific enterprise resource planning (ERP) software will consider using a balance sheet of approximately £250 million to invest in purchases.

The firm will specifically look at buying companies in the lumber and automotive spaces, according to its CEO Steve Murphy, as well as in manufacturing if the price is right.

"I'm not going to name any names there, because that's highly confidential, but it's consistent with the industry expertise thread," Murphy said at a press Q&A during Epicor's annual customer conference Insights 2019.

"But we're not going to go out buying anything that's doesn't fit one of the six core industries. I think it would be a mistake to think we know more than we do, so we'll just stick to what we know."

The company produces dozens of separate products for small and medium-sized businesses (SMBs) in the manufacturing, distribution, automotive, lumber, retail, and services industries. Any further acquisitions will likely see ERP software tacked onto this lineup of 50-plus products.

Asked which industries specifically Epicor may be looking at, Murphy told Channel Pro that automotive and lumber provided the best opportunities to do a deal as things stood.

But, he added, purchasing a company that develops manufacturing software would be most ideal, and Epicor has already identified the key candidates.

"I really like manufacturing as far as ERP, but the targets are expensive," he said.

"It's like making any investment, if you're going to buy stock in Facebook three weeks after it's gone public it might cost a lot, and you might not want to do it, but at a bargain price it makes sense.

"I'm not seeing many opportunities in manufacturing where I think the price is right. I'm seeing companies that I'd like to buy but it's very expensive."

More reasonably-priced companies can be found in the automotive and lumber spaces, however, with developers writing "really good" software that's modern and affordable for a company like Epicor.

As for what the company does with these products it absorbs, Murphy said the firm would have to be smart about how it handled the integration process. The views of customers and their feedback, in particular, would have to be taken seriously.

Lumber ERP software, for example, could be marketed as a standalone product for a year or two before Epicor considers integrating this into existing platforms.

"If we do a really good job of listening, and making sure that if we do some integration they still get what they need, we can probably integrate after a year or two," he continued.

"We would keep them separate long enough to make sure we don't ruin it. Because one of the biggest mistakes I've seen is you buy an acquisition, you get a company, it's great, and then you just smother it, and it dies."

Murphy added the targets and their services need to be kept alive long enough to understand what Epicor has on its hands, which people are contributing the most, and what makes the product unique before making decisions on integration.

"Once you've done that, and you've listened to your customers you can probably integrate it if you take your time. And if you don't, you'll probably fail."

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