QAD sees major expansion ahead with Redzone acquisition
Santa Barbara-based QAD has secured its second acquisition in as many months, this time purchasing Florida-based Redzone for a reported $1 billion, the software company announced Feb. 1.
QAD, which provides cloud software for the manufacturing industry, did not disclose how much the deal was worth.
However, according to Reuters, the deal is worth about $1 billion, which would make it QAD’s largest acquisition ever.
QAD did not respond to an immediate request for comment from the Business Times.
Redzone was founded in 2013, offering enterprise software solutions primarily for the manufacturing industry. It is on track to hit an annual revenue run rate of $100 million, QAD said.
According to QAD, over 1,000 plants and 300,000 frontline workers worldwide rely on Redzone’s solutions to create a better employee experience by energizing and arming teams with digital workflows and collaboration tools to get the most out of every shift.
QAD believes this acquisition firmly places them as a leader in the broader industrial software universe.
The addition of Redzone’s portfolio of workforce products helps QAD’s own adaptive applications product suite, designed to support companies dealing with disruptions in supply and fluctuations in demand, manufacturers and supply chains rapidly respond to change and seamlessly optimize agility, efficiency and resilience for effective customer service.
According to Deloitte, recent worker shortages have hurt manufacturers and the labor shortfall is expected to reach 2.1 million and cost the economy $1 trillion by 2030.
QAD believes with this purchase, it now has a complete end-to-end solution for manufacturers to fully realize the potential of its adaptive enterprise from the shop floor to the top floor, and from supplier to end customer.
“We are delighted to bring Redzone into the QAD family,” said QAD CEO Anton Chilton in a press release.
“We believe the emerging connected workforce space is the most transformational area of technology for manufacturing companies. As we assessed the market for the category leader, it was evident that not only is Redzone the #1 provider globally but also the pioneer of the category and the one who continues to define it.”
This is the second acquisition completed by QAD in the last two months as in December, QAD acquired Livejourney, a provider of a real-time process mining and predictive modeling solution designed to discover, monitor and improve business processes.
Redzone received a growth equity investment from Summit Partners in 2020 and has continued to deliver strong growth since then. Last year, Redzone grew bookings by 46%, added over 100 new clients and kept buffing its overall portfolio, making them an attractive buy.
Some of their customers include Nestle, Post Holdings and Tyson.
QAD was purchased in 2021 by the private equity firm Thoma Bravo in a transaction worth $2 billion. Since then, the company has gone back to private and has sold its Santa Barbara headquarters, though it did confirm it would still be keeping Santa Barbara as its headquarters going forward.
QAD sold its Santa Barbara headquarters on June 29 to the University of California for $104 million.
The company has said it plans on getting a smaller office for its workforce that remains here — a number that has not been confirmed — but it has not announced a new building as of yet and did not respond to an immediate request for comment.
“Since acquiring QAD in 2021, we have remained committed to supporting the Company in its mission to enable its customers to rapidly adapt to disruption and effectively innovate for competitive advantage,” Peter Stefanski, a Partner at Thoma Bravo, said in a press release.
“The acquisition of Redzone, with its impressive growth trajectory in a large, unpenetrated $40 billion market, demonstrates our commitment to advancing QAD’s vision and to further building its leadership position in the broader industrial software universe.”
Barclays served as financial advisor to Redzone, with Wilson Sonsini acting as legal counsel. Kirkland and Ellis LLP served as legal counsel to QAD and Thoma Bravo.