My initial take on Epicor, Activant and Apax Partners

Yesterday Epicor announced it had agreed to be acquired by Apax Partners. While I am not personally familiar with Apax, its website tells me it is an independent global private equity advisory firm and holding company for the worldwide Apax partnership which is the lead investment adviser to the most recent Apax Funds. Apax Funds buy both majority and minority stakes in large companies that have strong, established market positions and the potential to expand. It has a strong heritage of technology investment.

At the same time, it was announced that Apax would also acquire Activant Solutions and merge the two companies. The combined entity will operate under the name of Epicor Software Corporation and become a privately held company. Of course it is too early to tell exactly how the merger will be executed, but Epicor itself has a history of acquisition and is the only ERP company that has grown through acquisition and successfully executed a product convergence/consolidation strategy. Epicor 9, released in December 2009, is built on Epicor Internet Component Environment (ICE) 2.0, a second-generation Service-Oriented Architecture (SOA) and Web 2.0 technologies and is generally recognized for its visionary architecture. But just as importantly, Epicor 9 merges capabilities of nine different products (hence the “9” in the name).  If Epicor remains true to past strategies, I would expect it to treat the Activant products similarly.

But then again….maybe not. Activant serves some very specific vertical industries including:

·         automotive aftermarket

·         farm-home

·         hardware and home centers

·         heavy duty truck and trailer

·         lawn, garden and nursery

·         lumber and building materials

·         painting and decorating

·         pharmacy retail

·         specialty retail

·         wholesale/distribution

While Epicor also serves retail and distribution sectors, Epicor also has products which complement ERP in support of a retail environment, and has never been that “niche” oriented.  It remains to be seen whether these industries are best served by separate product lines or whether Epicor will decide to continue the convergence and turn Epicor 9 into Epicor 10, or maybe even Epicor 11 or 12.

For now it is safe to assume the transaction will be good for Epicor and allow it to fuel more aggressive growth in the market. As for Activant, customers should take comfort in knowing that Epicor’s strategy has been very customer-centric with a motto of “Protect, Extend and Converge.” Whether convergence is in the future or not, I have a lot of confidence in the resultant management team preserving the part about protect and extend.