The market for energy management software (EMS) and services to help companies reduce energy use and carbon emissions continues to mature. Vendors are broadening their product lines by acquiring smaller, innovative firms. Twelve companies were acquired by larger firms last year, and more acquisitions are expected in 2012. Corporate managers who plan to purchase an EMS in 2012 need to be mindful of this trend as they evaluate vendors.

For decades, software for providing energy use information was an add-on to control systems, monitoring systems, and asset management systems. These early EMS capabilities were often simply displays of current energy use with no data storage or analytics and were frequently tied to proprietary hardware.

In response to the increased need for visibility of a company's carbon emissions and energy use over the last few years, vendors have responded with a plethora of EMS solutions (here is our list of more than 100 such vendors). These newer solutions are full-featured applications with multiple options for data capture, sophisticated data analytics, configurable alerting systems, best practice databases, and innovative work order capabilities.

Large vendors are making these acquisitions to broaden their offering and to become full energy management services companies. These acquired capabilities include procurement, demand response, building commissioning, sustainability, bill management, and energy efficiency. Increasingly, corporate managers can look to one or a handful of companies to meet their energy management needs across a wide variety of applications and sites.

Notes:
• This chart lists vendors that sell energy management systems sold to companies, not utilities;
• Pace and EPS acquisitions were announced in early January 2012;
• Ecova was formerly named AdvantageIQ;
• SCIEnergy was formerly named Scientific Conservation.

In our Enterprise Energy and Carbon Accounting (EECA) Guide that we developed with GreenBiz last year, four of the top 20 companies we analyzed were acquired: ENXSuite, Pace, Summit Energy, and TRIRIGA.

Valuations for these transactions are typically confidential. Schneider Electric paid $268 million for Summit Energy and expects to generate $65 million in revenue. This implies a 4x enterprise value to revenue valuation ratio.

Acquisitions affect product road maps, pricing models, contract terms, investment levels, and many other aspects of a solution offering. Managers evaluating current and future vendors for EMS systems need to be aware of these acquisition trends. Acquisitions sometimes work but sometimes do not, and vendors need to thoroughly evaluate the impact of any acquisition.

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