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mergers & acquisitions | Oct 30, 2024 |
Design Manager expands with a pair of acquisitions

The race to control the interior design software space has a new twist. Design Manager, one of the industry’s oldest project management platforms, has acquired two software companies, DesignSpec and Lojik Design Systems. Both specialize in the contract and hospitality side of the industry. Terms were not disclosed.

The move, says Design Manager CEO Kevin Lee, is part of a two-pronged strategy. One is to broaden the company’s potential customer base to include more commercial design firms. The other is to offer the platform’s existing residential design clientele new tools to tackle hospitality and contract jobs.

“High-end residential interior design firms will often do a project for an executive, and then the executive wants to take that look and feel into either a new office or a new building,” says Lee. “Designers see that as an opportunity to expand the business, and when they get into it, they end up sourcing from different vendors for commercial goods, and the specifications get very complex—think flame retardants and building codes. Then on the hospitality side [the scale is very different from residential]. It’s: I don’t need a living room, I need 75 suites.”

Though Lee declined to disclose the total user count of the newly combined company, he says the deal will bring in hundreds of additional firms and thousands of new users into the overall portfolio.

DesignSpec was founded in 2018 by the brother-and-sister team of Fiona and Graham Sanipelli. The platform focuses on commercial spaces (like high-end restaurants, clubs and lobbies, per Lee), and is one of the few available systems that includes a Revit integration, meaning that users can pull visual design concepts directly into the program and turn specs into purchase orders.

Lojik is more specifically centered on hospitality projects, and has a deeper history in the industry. Founded in 1998, over time it spun up two separate tools called Spexx and Exxpedite to handle the documentation and purchasing sides of the design process, respectively.

The ultimate goal, says Lee, is for Design Manager to fold both platforms into its existing software, providing a solution for both commercial and residential designers—and those who go back and forth between the two sides of the industry. Combining all three tools will be a challenge (Lee says it’s too early to peg a timeline on the project), but success could create efficiencies across the industry: If everyone is using the same program, it makes transactions between vendors, designers and clients simpler.

This move comes at a time of consolidation in what has historically been an extremely fragmented corner of the industry. Over the past two years, Design Manager’s chief competitor, Studio Designer, has also acquired two companies: DesignDocs and Mydoma. According to Studio Designer, the deals have brought its user base up to 20,000, a sizable chunk of the residential designer industry.

Studio Designer’s goal is to create a “vertical” solution, with early-career residential designers and solopreneurs entering the pipeline through Mydoma, eventually upgrading to the more complex tools of the flagship software as their firms grow. By contrast, with its latest acquisitions, Design Manager is opting for a more “horizontal” approach, looking to span across a wider swath of the industry.

Lee’s challenge will be to smoothly integrate the two new programs into the existing platform, without creating a suite of tools that’s overwhelmingly complex or alienating to the average residential designer—especially those who aren’t working on commercial projects at the moment.

“The analogy I use is Microsoft Excel. Seventy-five percent of the things in there I never use, but the second I need them, they’re there—you have a pretty powerful tool,” says Lee. “We’ve always focused on what I would call the professional, growing design firm, regardless of size. It’s the mentality of: This is a business, and we’re growing the business.”

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