Altair acquires Flow Simulator & Autodesk acquires Innovyze

Goodness. Not even 7:30AM here on the US East Coast and the news is flying fast.

Autodesk just announced it will acquire Innovyze, a leader in “water infrastructure software”, for $1 billion (net of cash subject to working capital and tax closing adjustments). Why? Autodesk says Innovyze will make it a “technology leader in end-to-end water infrastructure solutions from design to operations, accelerate Autodesk’s digital twin strategy, and create a clearer path to a more sustainable and digitized water industry.”

I honestly hadn’t given water utility design and operations a thought until Bentley started buying up smaller companies addressing this market (here, here, and here). Then I learned (and from speaking with my own water utility) just how complex water really is. Predicting demand, ensuring delivery capability, dealing with the infrastructure for both delivery and recovery/gathering, and meeting water quality standards is no easy task. And many utilities aren’t tech wizards, relying instead on old-school experts to make it all work. Digitalizing existing infrastructure and systems is just the first step; using modern tech like machine learning can predict and optimize many aspects of a water system.

Autodesk says, “[c]ombining Innovyze’s portfolio with the power of Autodesk’s design and analysis solutions, including Autodesk Civil 3D, Autodesk InfraWorks, and the Autodesk Construction Cloud, offers civil engineers, water utility companies and water experts the ability to better respond to issues and to improve planning.”

The transaction will be financed with cash on hand and is expected to close by April 30, 2021. You can read more about the deal here and see the FAQ here. Autodesk announces earnings tomorrow; this deal will likely be a big part of that call with investors.

Altair‘s acquisition is more modest but no less important. It will acquire Flow Simulator, an integrated flow, heat transfer, and combustion design software, from GE Aviation and, as part of the acquisition, Altair and GE Aviation have signed a memo of understanding that has Altair continue developing Flow Simulator, granting GE Aviation access to Altair’s complete software suite, along with a “deeper strategic alignment and pursue new ventures.” You can learn more here.

This is interesting and highlights a trend we’ve seen for years: industrial companies divesting their in-house software to specialists, software vendors who can better support and extend those assets. In 2018, Altair became the exclusive distributor of Flow Simulator, and today’s announcement transfers development control to Altair. Then, Flow Simulator had more than 1,500 users in aerothermal and combustion engineering — all at GE. At the time, Altair CEO Jim Scapa said a priority was to make Flow Simulator more generally applicable, but that GE’s competitors had already expressed interest in the product upon its commercial release. Presumably, this new phase of the GE/Altair relationship will make Flow SImulator even more commercially viable.

Terms of this deal were not announced — but expect it to also feature in Altair’s earnings call, this one on Friday morning.