QAD has agreed to acquire Precision Software.
Approximately half of the all-cash purchase price was paid at closing on September 20, 2006, and the rest is expected to be paid over a two-year period. Precision will operate as an independent division of QAD.
The enterprise resource planning (ERP) provider, which has a solid base among manufacturing firms, particularly in the automotive vertical, is planning to use Precision’s TRAXi3 transportation management software to extend its footprint and embrace the extended supply chain. It will also enable it to take its first steps into a new set of verticals such as shipping and haulage.
Despite a solid customer base and a reputation for vertical expertise, QAD is suffering from mid-market ERP vendor syndrome in that it is finding it difficult to maintain its position in a consolidating market where the prizes appear to be going to larger players.
Although it has made a few acquisitions, it has mostly relied on organic growth, but this has flattened off. Over the past four financial quarters, revenue averaged about $55 million, while net income has generally been heading downhill and was $1.1 million for the quarter ending July 2006.
The Precision acquisition provides a way forward by enabling QAD to make additional sales to existing customers as well as enter as new set of verticals. The two vendors already have a relationship and have worked together since 1996 to provide certified interfaces between their respective applications.
Although QAD plans to offer the Precision software as part of a more complete manufacturing solution and will be able to do so because of work it has done to move its own suite to a service-oriented architecture (SOA) base, Precision will continue to sell its products separately, particularly in the freight forwarders sector and the desktop shipping market.
