On November 22, NavisionDamgaard, the merger of Navision
Software and Damgaard, fellow Danish providers of business
applications for mid-sized enterprises, announced it would continue to
market the two current companies' main product lines: Damgaard
Axapta, Navision Solutions, Damgaard XAL
and Damgaard C5. The boards of directors and the founders
of Navision Software a/s and Damgaard a/s recommended a merger under the
name of NavisionDamgaard a/s on November 21. The merger should create
an international mid-market leader with revenues of more than $140 million.
Navision Software and Damgaard into one company creates a perfect match.
Even though we have been competing in the same market, our main products
are positioned differently," says Preben Damgaard, CEO of Damgaard.
merger between our companies is natural because we can stop competing
against each other and instead focus on creating a strong global company
for the mid-market. By merging the two companies, we achieve a size and
a market position that enables us to participate actively in the current
international consolidation in the industry," says Jesper Balser, CEO
of Navision Software.
Solutions is primarily designed for small-to-mid-sized companies. It scales
from 5 to 300 users depending on the application setup. Damgaard Axapta
is primarily designed for mid-sized and larger companies and can be scaled
for up to 1,000 users. The merger might also generate considerable synergy
through a strengthening of the sales and marketing efforts.
current CEOs of Navision Software and Damgaard, Jesper Balser and Preben
Damgaard, will be joint CEOs of NavisionDamgaard. Preben Damgaard will
primarily focus on the overall operational management, while Jesper Balser
will concentrate on the strategic business management, organization and
external relations. The management will also consist of Lars Larsen, Chief
Financial Officer, Ren Stockner, Executive Vice President, Worldwide
Operations, and Niels Bo Theilgaard, Chief Product Officer. Waldemar Schmidt
is expected to be appointed Chairman of NavisionDamgaard, and Hans Werdelin
is expected to become Deputy Chairman.
merger proposal was recommended for approval at the extraordinary general
meetings, which were expected to be held by the two companies on December
21, 2000, and Navision Software a/s will be the continuing company.
increased M&A activity in the mid-market is no surprise and, therefore,
we regard this merger as a promising, although indisputably challenging,
move. The current market trend is towards vendors that can provide complete
solutions for the entire spectrum of medium-sized companies. This effervescing
market segment has been targeted by a large number of traditional incumbents
like Frontstep (formerly Symix), QAD, IFS, Great Plains, MAPICS, and Intentia
to name but a few, but also increasingly by Tier 1 vendors that are looking
for additional revenue and market share growth (for more information,
Claims Big Gains In The Low-End Battleground).
is a marriage of convenience, with both companies contributing and benefiting.
Navision enters the marriage with a strong international presence, proven
execution and a profitable business model. Damgaard, on the other hand,
offers a more scalable product, Axapta, that also has a broader functionality
footprint (heavy manufacturing, project control, HR, etc.), is Web-enabled
and well-suited for multi-site and multi-national companies. The combination
of the extensive distributor and subsidiary channels will result in more
than 2,000 affiliate partners, more than 120,000 installations, more than
1,000 employees, and local representation in 25 countries. Both product
lines are technologically compatible (Microsoft-centric) and will be maintained
concurrently while the intact Research and Development (R&D) teams will
attempt to gain economies of scale by building application components
that can be deployed within the entire product portfolio.
e-business and e-collaboration initiatives are can also be anticipated.
The company will develop the concept of Commerce Portals, Commerce Gateways,
and enterprise-focused Role Based User Portals to allow users to interoperate
with trading communities. The recent Navision partnership with Siebel
for a more comprehensive CRM offering (for more information, see Siebel
Has Done It Again - This Time with Navision) will also be extended
to the entire product suite. Both companies have also entered into ASP
winners will be the vendors with well-crafted product, technology, and
partner strategies underpinned with an efficient cost base. NavisionDamgaard
has envisioned significant cost savings (at least $16 million within the
next 12 months) because of rationalization of overlapping units, such
as physical infrastructure and duplicated field organizations, but has
vowed to keep R&D intact for now.
the merger will have some inevitable downsides. Despite the complementary
nature of the flagship products one should expect growing pains in appropriate
positioning of multiple products. The company will have to revise its
sales strategy to optimize the sale of four product lines with somewhat
overlapping functionality (particularly between Navision Solutions and
Damgaard XAL) and avoid internal competition; not to mention the need
of showing 'one face' to customers and probable brand recognition/confusion.
Moreover, NavisionDamgaard can expect growing pains (and added costs)
in merging disparate product lines, and in training and vertically specializing
the newly extended affiliate channel. It will be difficult to support
existing customers and existing products, while blending those somewhat
competitive product lines. Finally, despite the common focus, there is
much more organizational and corporate culture fine-tuning to be performed.
Experience teaches us to be wary of the outcome of mergers' and acquisitions'.
While some of them have gone awry in the past (for more information, see
Lives By Acquisitions; Will It Die By An Acquisition? and Epicor
Delivers On Milestones, But Its Situation Remains Bleak), the moves
of NavisionDamgaard's direct competitors, Great Plains and MAPIS, have
gone with smaller hiccups only (for more information, see MAPICS,
Inc. to Acquire Pivotpoint, Expanding e-business Offerings for Mid-Sized
Manufacturing Establishments, and Will
Solomon Finally Satisfy Great Plains' Insatiable Appetite?).
we believe that this merger will by synergistic in the long run, some
growing pains, integration issues, and discontinuation of redundant products
are to be expected. Consequently, until the merger is consummated, any
organization evaluating Navision or Damgaard should exercise moderate
caution, keep themselves informed, and consider existing functionality
only. Potential clients should conduct preliminary research on the industry
expertise and reference accounts of a regional NavisionDamgaard affiliate
service provider when the Navision or Damgaard product is selected. They
should also familiarize themselves with the products' strengths and weaknesses
within certain vertical industries. Navision distributors have generally
offered vertical solutions on an opportunity-by-opportunity basis only.