Why PTC Is Acquiring Onshape For $470 Million

By Dan Anderson ● October 30, 2019
  • PTC announced recently that it is acquiring Onshape for $470 million. These are the details about the deal.

PTC recently announced it signed a definitive agreement to acquire Onshape, which is the creator of the first SaaS-based product development platform that unites computer-aided design with powerful data management and collaboration tools. The deal was valued at $470 million, net of cash acquired.

This acquisition is expected to accelerate PTC’s ability to attract new customers and position the company to capitalize on the industry transition to SaaS. And the deal is expected to close in November 2019 pending regulatory approval and satisfaction of other closing conditions.

Based in Cambridge, Massachusetts, Onshape was founded in 2012 by CAD pioneers and technology experts Jon Hirschtick, John McEleney, and David Corcoran. They are also known as inventors and former executives of SolidWorks.

Onshape raised over $150 million in funding from several venture capital firms and has over 5,000 subscribers around the world. And the company’s software offering is delivered in a SaaS model thus making it accessible from any connected location or device. And the company eliminates the need for costly hardware and administrative staff to maintain.

Distributed and mobile teams of designers, engineers, and others are able to benefit from the product’s cloud nature as it enables them to improve collaboration and reduce the time needed to bring new products to market while also staying current with the latest software.

“PTC has earned a reputation for successfully pursuing new innovations that drive corporate growth,” explained Jim Heppelmann, PTC president and CEO. “Building on the strong momentum we have with our on-premises CAD and PLM businesses, we look to our future and see a new growth play with SaaS.”

This acquisition fits well in PTC’s overall evolution to a recurring revenue business model — which was the first step of the company’s successful transition to subscription licensing. The SaaS model — while nascent in the CAD and PLM market — is rapidly becoming industry best practice across most other software domains.

“Today, we see small and medium-sized CAD customers in the high-growth part of the CAD market shifting their interest toward SaaS delivery models, and we expect interest from larger customers to grow over time,” added Heppelmann. “The acquisition of Onshape complements our on-premises business with the industry’s only proven, scalable pure SaaS platform, which we expect will open new CAD and PLM growth opportunities while positioning PTC to be the leader as the market transitions toward the SaaS model.”

Customers benefit from the SaaS model as it enables faster work and improved collaboration and innovation with lower up-front costs and with no IT infrastructure to administer and maintain. And for software providers, the SaaS model has been proven to generate a more stable and predictable revenue stream, increase customer loyalty as customers benefit from earlier adoption of technology innovations, and enable expansions into new segments and geographies.

“At Onshape, we share PTC’s vision for helping organizations transform the way they develop products,” commented Jon Hirschtick, CEO and co-founder, Onshape. “We and PTC believe that the product development industry is nearing the ‘tipping point’ for SaaS adoption of CAD and data management tools. We look forward to empowering the customers we serve with the latest innovations to improve their competitive positions.”

Going forward, Onshape will operate as a business unit within PTC with current management reporting directly to PTC President and CEO Jim Heppelmann.

Barclays acted as exclusive financial advisor to PTC on the transaction.