Tyler Technologies, no stranger to mergers and acquisitions, has purchased MicroPact for $185 million. The company works a lot with the federal government, and its state and local efforts lean toward larger customers.
Tyler Technologies, one of the largest and oldest software companies focused on the public sector, is all about pre-built software for state and local government.
So it might come as a bit of a surprise that the company just spent $185 million to acquire a company, MicroPact, that makes an app development platform and does half its business with the federal government. But Brian Miller, Tyler’s chief financial officer, says the companies are a better fit than they first appear to be.
That’s primarily because MicroPact’s philosophy is all about being “low-code.” They develop apps specific to customers' needs, but they mostly spring from apps the company has already created. It’s meant to be a streamlined approach to solving unique needs.
“My understanding is that it’s a pretty easy platform to work with. The configuration and implementation, there’s not a lot of coding that takes place,” Miller said. “It’s a pretty nimble platform.”
Still, the move represents something of a shift in the way Tyler does business. Its acquisition of Socrata last year moved the company into some federal work and inched it closer to the platform development model of doing business. The MicroPact deal extends that trend.
“Really the first federal business we’ve had of any note came through the Socrata deal we had last year, and it was on the order of $5 million in revenues,” Miller said.
Outside the federal government, MicroPact’s customer base leans toward the larger customers. Its customer base of 350 public-sector clients includes agencies in 49 of the 50 states such as the California Department of Consumer Affairs, the Florida Department of Business and Professional Regulation and the Tennessee Department of Health.
MicroPact’s development platform, entellitrak, is geared toward case management and business process management. Its software portfolio includes software for courts, licensing and permitting, health and human services and workers’ compensation. A lot of those are areas Tyler has worked in for a long time, but Miller said there isn’t a lot of customer overlap.
“Our courts and justice [work] is primarily oriented at trial courts at the county level or traffic courts at the municipal level,” he said. “They’ve done a lot more at the state and the federal level, so their application is used for the Department of the Navy to manage their trials.”
MicroPact’s delivery model often involves selling its platform to an agency with a specific use case in mind, and then the company will deliver the needed solution through some combination of development services, internal expertise and partnerships. The company operates a partner network, called the MicroPact Global Alliance, that includes partners such as Accenture, Amazon Web Services and Booz Allen Hamilton.
The buyout is the second-largest acquisition in Tyler’s history behind its $670 million purchase of New World Systems in 2015. It’s also the latest in a hot streak of merger and acquisition activity of the company — aside from Socrata, Tyler has also acquired CaseloadPRO, MobileEyes, Sage Data Security and SceneDoc in the past year.
MicroPact’s staff shouldn’t expect big personnel changes as a result of the buyout, Miller said.
“The management team as well as the staff will be pretty much intact,” he said. “That’s a big part of [MicroPact’s] value as a company.”