Video transcript
Peter Dalrymple: Certainly as it relates to COVID-19 no one is immune, but our view is that software will be resilient. It's a business category that's generally well-insulated and in certain regards may actually stand to benefit from the pandemic in a few ways.
Obviously, the impact of COVID will vary across different software markets; however, there are a few key differentiators across any vertical that we believe will separate the leaders from the laggards. Certainly, a competitive mode and a right to win is a necessity; are there established barriers to entry that are well positioned to sustain customers. The current market environment also clearly favors software vendors whose solutions deliver a really strong ROI impact.
At [William] Blair, we spend a significant amount of time covering nearly every vertical across the software landscape. There are a few in particular that we think are well positioned in the current environment, and that we would expect to be well positioned over the longer term, not the least of which includes governance risking compliance.
Within education our expectation is that we would see increased investment in remote learning models and enhanced content and delivery to improve the customer experience and the student experience. Within real estate, another vertical in which we spend a significant amount of time, our expectation is that property management companies will rely even more so on truly best-of-breed, resident engagement platforms, which could include the collection of rent through digital payment solutions. Within operations facilities management we expect to see greater utilization of building operational data and analytics that can gain insights and learnings particularly around space utilization and efficiency. And within supply chain, interruptions to both supply and demand side prove that a digital supply network that can efficiently and accurately enable global commerce is more important than ever. Across any vertical we are seeing heightened demand for software led integrated payments and automated solutions. The broader move to digital and digitization across any vertical will naturally accelerate the move to integrated payment solutions in our opinion, particularly with an increased emphasis on expensed reduction and automation. It just makes the embedded nature of integrated payments much more vital.
So what does this mean for M&A? We expect there will be a greater supply demand imbalance between best-of-breed platforms and those strategic and financial buyers that are seeking a safe haven for capital returns by investing in mission critical assets of scale that are profitable, that can further separate themselves from the competition, be in a position to accelerate and sustain growth over the long term, and that will be best suited to consolidate fragmentation in so many of these vertical markets. We expect and believe that buyers will be more focused, spending time in the categories in which they have conviction and familiarity, but at the same time be willing to stretch on price for assets that prove to be not only recession resistant, but pandemic resistant as well.