Dive Brief:
- Johnson Controls has acquired digital workplace management and facilities Internet-of-Things provider FM:Systems from Accel-KKR, according to a Monday press release.
- The base purchase price of the deal is $455 million. Additional payments will be made based on post-closing earnout milestones.
- The acquisition is intended to bolster Johnson Controls’ OpenBlue platform with office dynamics offerings and additional net-zero building capabilities.
Dive Insight:
Johnson Controls noted that its purchase of FM:Systems will accelerate its pace of building technologies that can help achieve net-zero emissions and create new opportunities to meet the strong demand growth seen in the smart building market. The smart building market size is projected to reach $189.05 billion by 2030, more than doubling from $72.6 billion in 2021, according to Reports and Data.
"Workplace management technology is a key enabler in terms of improving operational efficiency, creating safer, healthier and smarter buildings, and supporting sustainability goals. Since our investment in 2017, FM:Systems has become a leader in this space with continued innovation and service excellence, leading to a strong growth profile," Dean Jacobson, managing director at Accel-KKR, said in the release.
FM:Systems’ facilities management and office solutions include security protocols and floor plan scenario modeling. The company’s AUTOCAD and Revit models, connected to the cloud, aim at smoothening day-to-day facility operations workflows such as space-scenario planning and asset management. Johnson Controls said that FM:Systems’ approach to integrating these models will strengthen OpenBlue’s digital twin technology.
Headquartered in Raleigh, North Carolina, FM:Systems has more than 1,200 customers, 200 employees and over 2.4 million users across 80 countries. The company has clocked in an average net revenue retention of more than 110% since 2020, and saw double-digit revenue growth in that time, which Johnson Controls says will be “accretive” to its business.
"Coupled with our building asset solutions, energy management offerings and global field network, this acquisition further differentiates Johnson Controls' leadership in the fast-growing segment for autonomous and digitally enabled buildings,” said George Oliver, chairman and CEO of Johnson Controls.
FM:Systems CEO and chairman Kurt von Koch will join Johnson Controls’ digital business in a leadership role. Despite the additional capabilities, Johnson Controls says the acquisition is not expected to impact its 2023 fiscal year financial outlook.
Johnson Controls’ North America building solutions business generated $315 million in earnings before interest, taxes and amortization during the first quarter of 2023, according to the company’s quarterly report. This segment designs and sells integrated HVAC, building management, security, fire detection, energy efficiency and smart building solutions.
On Tuesday, FM:Systems announced that it has received the Federal Risk and Authorization Management Program’s “In Process” designation. The FedRAMP program provides a standardized approach to security and risk assessment for technologies to encourage the use of secure cloud services across the federal government.
FM:Systems said its sponsorship with the U.S. Department of Education will facilitate its endeavor to reach full FedRAMP authorization for its FMS:Workplace solution within the next year. The workplace management platform is currently used by more than 150 government departments, including 10 of the 15 federal government departments, the company said.
Centerview Partners LLC and Clear Gottlieb Steen & Hamilton LLP acted as the financial and legal advisor to Johnson Controls on the deal. Moelis & Company and Raymond James served as financial advisors to FM:Systems with Goodwin Procter as legal advisor.
