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American company PTC acquires ServiceMax to strengthen field service management

field service management

Software firm PTC has signed a definitive agreement to acquire cloud-based software provider ServiceMax for approximately $1.46 billion in cash.

The acquisition will strengthen PTC’s closed-loop product lifecycle management (PLM) offerings by extending the digital thread of product information into downstream enterprise asset management (EAM) and field service management (FSM) capabilities. The transaction is subject to the satisfaction of regulatory approval and other applicable closing conditions and is expected to close in early January 2023.

“The addition of ServiceMax will realize a key part of PTC’s closed-loop PLM strategy,” said Jim Heppelmann, President and CEO, PTC. “The PLM capabilities PTC has long offered to engineering and manufacturing departments provide the system of record for the digital definition of any product configuration. ServiceMax will complement this by providing the system of record for monitoring and servicing product instances after they leave the factory and move into customer use. Upon completion of this acquisition, PTC will have the unique ability to complement the full digital product definition from our computer-aided design (CAD) and PLM solutions with detailed usage information from our internet of things (IoT) solutions and the complete service history from ServiceMax. PTC is poised to be the only company that will be able to offer manufacturers this comprehensive view of their products at each stage of the lifecycle.”

“ServiceMax and PTC have a longstanding relationship rooted in the common profile of our customers, the natural synergies of our products, and a shared understanding of the importance of product data at different stages of the lifecycle,” said Neil Barua, CEO, ServiceMax. “PTC has a strong and consistent track record of success, and now following the growth and innovation we’ve achieved during our partnership with Silver Lake, we’re excited for the ServiceMax team to strengthen the service offerings of PTC’s digital thread and closed-loop PLM portfolio.”

Service Max’s FSM capabilities will complement PTC’s digital thread portfolio

PTC and ServiceMax have been working together since 2015. They both support manufacturers of complex, highly configured products for medical devices, industrial products, aerospace, and related verticals. For these manufacturers, field service management is a strategic part of their business for maintaining product performance, extending their products’ lifecycles, increasing customer satisfaction, driving revenue growth, and expanding profitability.

ServiceMax’s comprehensive suite of cloud-native FSM capabilities is built on the Salesforce platform. This suite includes managing all information about serviced products, creating and managing work orders, and scheduling and dispatching technicians. ServiceMax’s capabilities are closely integrated with Salesforce’s customer relationship management (CRM) system, which provides an understanding of customers’ needs as well as the products they’re buying.

ServiceMax’s FSM capabilities will work well with PTC’s entire digital thread portfolio. It can leverage product definition data from PTC’s Creo and Windchill solutions. Technical publishing capabilities can be used from PTC’s Arbortext software and service parts management capabilities from PTC’s Servigistics software. IoT and digital twin capabilities can be leveraged from PTC’s ThingWorx solutions and augmented reality (AR) capabilities from PTC’s Vuforia software.

Transaction details

The purchase price for this transaction will be funded in two stages. $808 million will be paid at the closing of the deal, and an additional $650 million will be paid in October 2023. The transaction amount will be funded with cash on hand, borrowings from PTC’s existing credit facility, and a new $500 million committed term loan.

ServiceMax is expected to contribute around $160 million in Annual Recurring Revenue (ARR) for PTC’s Q2’23. The transaction will be accretive to PTC’s FY’23 cash flow from operations, free cash flow, and adjusted free cash flow targets.

Centerview Partners LLC was the financial advisor to PTC on the transaction. Goodwin Procter LLP served as PTC’s legal counsel. PTC will receive transaction financing from JPMorgan Chase Bank, N.A., BofA Securities, Inc., The Huntington National Bank, and TD Securities (USA) LLC.

Barclays was the financial advisor to ServiceMax, and Ropes & Gray LLP was the legal counsel.

Read next: US-based MSP Thrive expands services in the UK with the acquisition of Custard Technical Services

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