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Bentley files for IPO - Q&A

By Ralph Grabowski, editor, upFront.eZine, April 30, 2002

(reprinted by permission)

     See Also

Bentley to Go for IPO - extended coverage of Bentleys' s planned initial public offering, compiled by TenLinks.com

Bentley Systems last week issued a curt press release that it had filed with the American SEC to sell its shares publicly. Currently, shares are held by the Bentley founders, employees, and Intergraph.

Bentley Systems would not answer questions, claiming they were in the SEC-mandated quiet period. So we in the CAD media were left searching through the 200-page filing with the SEC, an HTML document filled with plenty of blanks, such as "shares of common stock issuable upon exercise of options outstanding to be assumed in connection with the proposed acquisition of Rebis at a weighted average exercise price of $ per share." We were, however, able to glean some information:

  • Proposed maximum offering: US$172,500,000 [not a lot, when you consider that Autodesk recently paid US$133 million for Revit.
  • To be listed on the New York Stock Exchange under the symbol BSS.
  • Some of the money raised will be used to purchase the remaining 87.5% of Rebis.
  • US$15.2 million will repay indebtedness under an acquisition note.
  • The remainder will be for general corporate purposes, capital expenditures, and more acquisitions.

What is not clear is how many of Bentley's seven million shares will be made available to the public.

With Bentley going public, it must now reveal details of its financial state, details it could keep secret while a private company. Now we know: In 2001, its revenue was US$202.6 million with a net income of US$4.1 million in 2001. While 2001 was a good year, Bentley ran losses in 1998 and 2000.

Some 48% of sales were outside North America; no single customer accounted for more than 1% of revenues. Perhaps most interesting, more than 60% of revenues are derived from subscriptions.

A drawback to going public is that Bentley can be considered a take-over target, hostile or otherwise.

Our 'Q's and Our 'A's

Since Bentley would not answer our questions, Brad Holtz of CADwire.net and I came up with answers on our own. Remember, the answers are our best guess, and are not from Bentley Systems:

Q: How does Bentley plan to compete with a "Revit-ized" Autodesk?

"A": By emphasizing markets other than architectural and mechanical. The strength of Rebis, for example, is in chemical, power, pharmaceutical, offshore, oil & gas, shipbuilding, waste water, food processing, mining & metals, HVAC, and photogrammetry. These are many industries where Autodesk has no foothold.

Q: In the last couple of years, some publicly-traded CAD companies reverted to private ownership, such as Eagle Point Software, because maintaining shareholder expectations proved too difficult. Why is Bentley going public?

"A": MicroStation sales are mature; indeed, most of their income is through subscriptions from existing customers. Thus we see growth coming from acquisitions.

First, Bentley wants to acquire 100% of Rebis, and then have funding for additional acquisitions. The amount we need is more than can be raised through private financing.

Q: The IPO market is considered poor right now. Why do an IPO now?

"A": Bentley needs the cash to continue to grow. While the IPO market for new companies is in the toilet, the market today looks favorably on mature, profitable companies. We don't expect that to improve significantly in the next 12 months and we believe we are better served coming to market now.

Q. When does Bentley plan to launch the IPO?

"A": Probably in the second or third quarter of this year.

Q: How will employees benefit?

"A": Bentley has been aggressive in building employee loyalty by distributing company options to employees fairly far down the line. They should be able to begin to benefit from that. For many, it's about time.

Q: Most technology companies list on NASDAQ. Why list on the NYSE, and not NASDAQ?

"A": Because of the prestige a NYSE listing confers on a company.

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