One of the big trends for the AEC industry that we’ve discussed in recent years at Geo Week News is this new focus for companies around integration and consolidation. The industry is no longer lacking for digital tools or firms eager to adopt them. Instead, there are now so many distinct tools that it can be overwhelming to take advantage of them. Leaders, as always, are looking first and foremost to streamline their operations, and at a certain point too many tools that don’t integrate no longer achieve that mission. Because of that, we are seeing more formal partnerships between companies to cleanly integrate their tools into a nicer experience for users, and acquisitions from the biggest players to meet new needs for their customers.
While in attendance at Hexagon Live last month in Las Vegas, Geo Week News was able to dive into this topic with Hexagon leaders to see how they, one of the biggest providers of AEC and geospatial tools, are thinking about this process. Alex Brihac is the company’s vice president of strategy and M&A, coming over in 2023 after six years at McKinsey. Having spent his entire professional career either working in or around the AEC industry, he has seen shifts in attitudes from leaders in the space, and he spoke with Geo Week News about how Hexagon is approaching conversations about integration and acquisitions of startups and scale-ups in the industry, how the industry has changed through his professional career, and where he’s looking for the future.
Among the more basic, but vitally important, aspects of this work for someone like Brihac is simply wading through the many startups and figuring out what exactly they do and what matches what, in this case, Hexagon is looking for in terms of capabilities, scope, and culture. This can be particularly challenging in this industry, which today is filled with somewhat vague buzzwords as many products are promising AI-powered capabilities and paths to digital twins. It’s not that they are lying, but rather that these terms mean different things to different people and organizations, creating extra work to tease out the value they provide today, and what they could theoretically add for a larger organization.
For Brihac and his team, this means a lot of manual leg work to figure out what companies could be a good fit. He told Geo Week News that they have an internal list of hundreds of startups and scale-ups. His team then looks at what these companies actually offer via a number of different methods.
“Basically, for each startup, we have the workflows that they cover and the depth to which they cover those workflows, and we map all of that out,” he explained. “First, you value the website in terms of the actual screenshots and dropdowns of what they do. Then, you have interviews with customers because our customers inevitably use some of these, and you ask them what features they have. And third, we have contacts with these companies and we get demos. And then, once we map everything, we actually start to give scores for these workflows to understand the depth across which they cover each of these workflow steps, and it basically becomes kind of like a jigsaw puzzle. It’s a very tedious process, but there’s no shortcut to it.”
Of course, it’s not just the technical capabilities that are evaluated during this process, particularly for an acquisition. Companies today have a number of options at their disposal between integrations, formal partnerships, and acquisitions. For Hexagon, Brihac says, there are a few different places they look for a potential acquisition. That includes speaking with founders and determining the culture fit, figuring out how much sales or R&D support they’d need upon acquisition, as well as what he refers to as customer excitement.
“They need to have a lot of customer excitement around them,” Brihac noted. “The reason why I say excitement and I don’t use any fancier terms is because you can evaluate excitement in different ways. They might not be the highest-paying customers, but maybe there’s a blog around the solution. Customers are so excited, basically they become customer support in a way.”
Along with talking about some of Hexagon’s strategies around acquisitions, Geo Week News also asked Brihac about some of the ways that the AEC industry has changed since he started working with Turner Construction over 15 years ago. He pointed to the last five years of being the major marking of change in the industry, particularly around the industry’s relationship with technology. For him, it’s been a natural evolution that has accelerated in recent years as the older generations have retired, and newer generations have taken over. When he was entering the industry in 2009, technology was available, but the leaders and mentors were still leaning heavily on Excel and paper. Now, graduates are entering the industry expecting to use technology, and their mentors have the same expectation.
Additionally, he spoke about changing attitudes with venture capital and how that will only continue to accelerate these trends.
“If you look at a lot of private equity firms, they’re investing heavily into low-hanging fruits of tech solutions, which are usually in manufacturing, industrial, and financial sectors. Nobody was looking at construction because it was not the low-hanging fruit; it was too fragmented. But what has happened now is that low-hanging fruit is a bit saturated with investments, so now you have VC firms and private equity firms who are like, Okay, now what?”
As Brihac sees it, the pieces are in place for the AEC industry to enter a new era of widespread technology adoption. The tools are no longer emerging, the workforce is no longer averse to new technologies, and the money is starting to enter the fray. For industry leaders like Hexagon, the challenge now is less about proving the value of these new tools and more about aligning the right ones with the right workflows, values, and teams. That means a continued focus on integration, simplification, and a clear-eyed look at how each piece of the puzzle fits together.
