Tecplot’s New President Tom Chan on Vela Software’s Acquisition

This month, simulation data visualization software maker Tecplot was acquired by Vela Software.

Tom Chan, Tecplot’s new president, discusses the acquisition and Tecplot’s future under Vela Software.

This week, Tecplot, which specializes in engineering and simulation data visualization, announced it’s been acquired by Vela Software, an operating group of Constellation Software. According to the Tecplot, “cofounders Don Roberts and Mike Peery, who previously served as CEO and Chairman, respectively, will retire. Tom Chan, Tecplot’s VP of customer development and a 20-year employee of the company, was named President.”

Since simulation has become a critical phase in product development, smaller, specialty software makers and even midsize firms in this space are good acquisition targets for bigger players. Design software giant Autodesk’s simulation portfolio is essentially a history of acquisitions over the last decade, covering assets from NEi Nastran (the company wasn’t acquired, but its Nastran solver was in 2014), Firehole Technologies (acquired 2013), Blue Ridge Numerics (acquired 2011), and ALGOR (acquired 2008). Such acquisitions rarely raise eyebrows, because CAD (computer-aided design) and CAE (computer-aided engineering or simulation) are considered closely related (cousins, if you will), and people advocate an integrated workflow between the two.

It is, however, unusual for a company with limited presence in the design and engineering software sector to acquire a simulation software vendor. The intimate knowledge required to navigate the small but highly competitive simulation industry tends to discourage outsiders. Many engineering software users are familiar with Tecplot, which can be used to further analyze engineering simulation results; however, few might be familiar with Vela Software, described as a firm that “acquires, manages, and builds specific software businesses that provide specialized, mission-critical software solutions.”

So we asks Tom Chan, Tecplot’s newly appointed President, to clear up the nature of the acquisition.

DE: Who approached whom for the acquisition? When did the first contact occur?

Tom Chan: About two years ago, [cofounders] Mike and Don began exploring options for how best to exit Tecplot. After leading our company for most of their adult life, they were simply ready for retirement. They wanted to enjoy the benefits of decades of hard work and do other things with their life, primarily spending more time with their families. The most important consideration for both of our founders was to find a partner that would make Tecplot an even stronger, more successful company for both our customers and employees.

To facilitate the transition, Mike and Don retained a mergers & acquisitions consultant who was charged with identifying possible suitors. About six months ago, this consultant brokered an initial meeting between Toronto-based Constellation Software, Inc., the parent company of Vela Software, and Tecplot. After a months-long due diligence process by both parties, a deal was struck whereby Tecplot would be acquired by Vela Software, Mike and Don would retire, and I would become president of Tecplot going forward.

Our company wasn’t acquired because it was broken and needed fixing. We were acquired because we will deliver value to our key constituents—Vela Software and our customers.

DE: The new owner, Vela Software, appears to be in the acquisition business, not engineering software business. What do you expect their strategy for Tecplot would be for the near future and longer term?

Tom Chan: Vela Software’s expertise is in identifying, operating, and growing software companies whose products are mission-critical in specific vertical industries. Their management team identified aerospace & defense and oil & gas as two industries in which they wanted to expand their solutions portfolio. These happen to be industries in which Tecplot is very strong. Our Tecplot 360 EX product is the leading visual data analysis software for aerospace engineers, and our Tecplot RS product is widely used by oil & gas engineers for reservoir visualization. As a result, Vela Software is the perfect fit for Tecplot and vice versa.

Vela Software’s strategy for Tecplot is to help us grow our market share in these key verticals, both domestically and internationally, by providing business management expertise, investment capital, and global resources. Constellation Software, Vela Software’s parent company, is Canada’s largest public software company, with nearly $2 billion in annual revenue. As a result, we’ll now have access to resources we could never dream of when we were an independent company.

For example, perhaps we will now buy technology we wish to integrate into Tecplot 360 EX instead of building it from scratch, meaning we can bring it to market much quicker and generate additional revenue sooner. Prior to the acquisition, this would not have been possible because of the up-front investment such a technology purchase would require.

From a customer standpoint, Vela Software’s acquisition means we’ll be able to develop new features faster, solving more aspects of their workflow. Furthermore, I expect our customers will have greater confidence in our “staying power.” Many have made a significant investment in Tecplot software and they can now be assured that they will continue to receive the same great industry-leading technical support.

DE: How many employees does Tecplot currently have? How does this acquisition affect the existing employees?

With the retirement of Mike and Don, Tecplot now has 40 full-time employees. As I mentioned earlier, the well-being of both our customers and employees was a key consideration when the two were seeking potential buyers. Mike and Don sought a buyer that would elevate Tecplot to the “next level,” which would create professional development opportunities and financial rewards for our employees. In Vela Software, our entire management team feels strongly that Tecplot has found such a buyer and we’re all excited to be part of such a strong, vibrant and growing organization.

On a personal note, I hope it brings some sense of stability and reassurance to our employees that Vela Software has appointed me as president. I’ve worked for this great company for 20 years. It’s in my blood. I’m so honored to now lead our outstanding team of talented and dedicated professionals into the future. Together, we will build upon the foundation Don and Mike have left for us, elevating Tecplot to even greater levels of success.

DE: How does the acquisition affect Tecplot resellers? How does it affect its software partnerships?

My message to our resellers and software partners is, growth is coming. Vela Software values the relationships we have with these companies, some of which go back many years or even decades. With the new resources at our disposal, we are planning significant growth in resellers and software partners.

Vela Software will help us strengthen our current relationships and, at the same time, expand our reseller network, especially internationally, where we’ll be able to leverage their powerful geographic reach and influence.

In all likelihood, synergies will exist between Tecplot and some resellers of other Vela Software portfolio companies. This is one way in which our distribution network might grow quickly and an example of the positive change Vela Software will bring to Tecplot.

DE: What’s your vision for Tecplot’s growth, opportunities, and new markets?

My vision is simple and clear. Tecplot will become THE undisputed data visualization software leader in our two core markets—aerospace & defense and oil & gas. We are not seeking to expand into new markets. Rather, we are looking to dominate markets in which we are already strong.

Given our strong management team and skilled employees, Tecplot is well-equipped to execute against this vision. We will do this by building on the tremendous legacy created by Mike and Don. In the process, we will deliver a steady-stream of innovative new products to our customers and a solid return-on-investment to our new owner, Vela Software. The key will be consistent execution. We will plan the work and work the plan.