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Gov Tech Biz Quarterly Roundup: Q1 2023 With Jeff Cook

Although there is still some hesitance in the market due to economic instability, the gov tech biz remains strong, and the signs are there for a flurry of activity in the future, according to expert Jeff Cook.

Q1 2023 ended up being a surprisingly active quarter, landing above expectations in terms of deal volume and number of deals. In Q1 we tracked $2.2 billion in deal volume, up from $1.5 billion in the prior quarter and a about a 2.5-times increase over Q1 2022’s volume of $850 million. The headlines on deal volumes were in part buoyed by large deals like Magnet Forensic’s take-private by Thoma Bravo and subsequent merger with Grayshift. Thematically, the composition of transaction types is what we expected — notable activity in public safety and many smaller strategic deals, but a lack of private equity activity that typically is a material portion of deal activity.

As Q1 ends, we typically have a much better feel regarding activity for the remainder of the year. Much of January and February is spent by companies focused on year-end close activities, annual planning sessions and board meetings, and as we get later into Q1 we start to get a sense of how operators and investors are thinking about their plans for the year ahead, much of which is a window into transaction activity. A few common themes from those discussions:
  • Many companies had a strong Q1 and are on plan to hit bookings and revenue targets for 2023.
  • A record volume of “inbounds” to companies by investors looking to invest in the market — in public safety, a high level of strategic inbounds.
  • More skittishness about the state of capital markets, exacerbated in part because of the Silicon Valley Bank/regional banking crisis.
  • An openness to exploring transactions and accessing capital markets (taking new investments, pursuing add-on acquisitions or recapitalizations), but penciled in for the second half of the year with the expectation that the economy will continue to stabilize in coming months.

Overall, these sentiments encapsulate today’s market — the gov tech category continues to perform well, there is strong buyer demand, but the uncertainty in the capital markets is keeping companies on the sidelines. That said, a backlog of companies looking to transact is building and we expect a flurry of activity if and when more stability enters the markets.

The volume metrics above and transactions below are for deals announced between Jan. 1, 2023 and March 31, 2023.


Magnet Forensics’ $1.35B Buyout and Subsequent Merger with Grayshift

Why It Matters: Magnet’s $1.35 billion buyout and ensuing merger with Thoma Bravo-backed Grayshift creates one of the largest privately owned platforms in the market today, and certainly the largest business serving the investigations and forensics segment of public safety. Magnet has emerged as a leader in the increasingly digital evidence management space, serving both law enforcement and enterprise use cases in the collection and analysis of forensic data as investigators find themselves with mounting sources of evidence from mobile devices, computers, cloud repositories and body-worn cameras. It’s been an active acquirer within the investigations and forensics space. Combining Magnet and Grayshift reflects a trend we have long been tracking across public safety — consolidation of complementary solutions and an increasing focus on the investigative and forensics segment. Investigations and forensics has seen a major uptick in investments with businesses such as PenLink, LeadsOnline and Grayshift. We see this as a precursor for further activity given the high fragmentation in the market and significant opportunity to build a platform that stretches from investigations through to resolution in the courts.

ImageTrend Receives Strategic Growth Investment from Welsh, Carson, Anderson & Stowe

Why It Matters: Private equity firm Welsh, Carson, Anderson & Stowe (WCAS) announced a strategic growth investment in ImageTrend, a provider of records management, electronic patient care reporting and operational systems to EMS and fire agencies. By serving EMS agencies, ImageTrend provides a link between the public safety and health-care markets, a huge opportunity that has attracted significant investment in recent years, with other major players including ESO, Emergency Reporting and First Due announcing transactions of their own since the beginning of 2021. The transaction marks ImageTrend’s first institutional investment, having grown to serve 3,000-plus customers in 40 states as a founder-owned, bootstrapped business.


RapidDeploy Raises $34M

Why It Matters: RapidDeploy’s $34 million capital raise from Edison Partners marks the latest in a two-year stretch of investments in technologies that are modernizing emergency response. RapidDeploy has grown rapidly by providing mapping technologies, automation and communication services to 911 centers who use that information to respond faster and more effectively. The combination of bipartisan legislation and funding is poised to make this an active category in the years ahead.

Singlewire Acquires Visitor Aware

Why It Matters: Singlewire, a provider of notification and incident management solutions, expanded its offerings in the education vertical through the acquisition of Visitor Aware. School safety remains a top priority of education leaders across the K-12 and higher education segments, with visitor management and access control one of the critical offerings. In addition to solving key challenges around school visitor check-in and check-out, Visitor Aware extends Singlewire’s coverage into major operational workflows such as attendance tracking, student release and post-incident reunification, as well as offering similar visitor management solutions to business and health-care customers. The acquisition marks Singlewire’s first add-on acquisition since receiving an investment from Providence Strategic Growth in April 2021.

Polco Merges with Balancing Act

Why It Matters: The combination of Polco and Balancing Act brings together two like-minded citizen engagement companies using feedback to inform government decision-making. A natural fit with Polco’s citizen survey platform, Balancing Act’s simulation-based tools empower citizens to experience and participate in important, complex government processes such as budgeting and housing, creating transparency and accountability and ultimately building trust between agencies and constituents. The combined business will operate under the Polco umbrella while retaining individual branding, integrating Balancing Act’s functionality into the Polco suite.

GTY Acquires Ion Wave Technologies

Why It Matters: GTY restated its recent focus on the procurement space with its acquisition of Ion Wave, announced just one month after its acquisition of government contract bidding platform DemandStar. Ion Wave adds a contract bidding and life cycle management tool to GTY’s existing procurement portfolio and also opens the door to K-12 education segment with its SpedTrack product. Ion Wave is GTY’s second acquisition since the company was taken private by GI Partners in 2022.

Versaterm Acquires Visual Labs and CI Technologies

Why It Matters: Versaterm is no stranger to gov tech biz, having now completed eight add-on acquisitions since the public safety vendor was acquired by Banneker Partners in December 2020. Versaterm has augmented its suite of public safety solutions through M&A, and the company’s latest acquisitions of Visual Labs (smartphone body camera technology) and CI Technologies (professional standards, internal affairs and wellness software) are no different, extending the platform’s functionality both in the field and in back-office operations.

Zetron Acquires GeoConex

Why It Matters: Critical communications provider Zetron offers a robust product portfolio for public- and private-sector customers, with solutions such as computer-aided dispatch (CAD), GIS, command and control, and an extensive line of radio equipment. Zetron’s acquisition of GeoConex was the culmination of a 14-year partnership — beyond being a leading reseller of Zetron solutions, GeoConex’s CAD offering is an important component of Zetron’s command-andcontrol suite. The two businesses will continue to capitalize on product-, distribution- and operations-related synergies as a combined entity.

Avenu Acquires Interware

Why It Matters: Avenu has become a major player in government revenue management since its 2018 spinout from business process vendor Conduent. The company’s latest acquisition of Interware will provide centralized payment processing to Avenu’s more than 3,000 state and local customers. Because most interactions between agencies and citizens involve some sort of transaction (think property taxes, licensing/permitting, vital records requests and more), and agencies’ most critical revenue sources rely on efficient execution of these transactions, payments has become a strategic focus area for many citizen-facing public administration software platforms.

Miovision Acquires MicroTraffic

Why It Matters: Within the smart city ecosystem, traffic analytics is an increasingly foundational component of modern city planning and road infrastructure management. Problematic traffic zones were historically identified based on crashes — a reactive approach that puts drivers and pedestrians at unnecessary risk. Data and predictive analytics have enabled agencies to become more proactive, and MicroTraffic’s road safety video analytics platform is one such offering, analyzing near misses and identifying risky areas before crashes occur. MicroTraffic has been deployed in over 100 cities since its 2017 founding, expanding Miovision’s portfolio of intelligent traffic solutions and data sharing tools.

Via Acquires Citymapper

Why It Matters: Via has carved out a unique niche in the smart cities landscape, offering software-driven mobility solutions that extend the reach of public transit into neighborhoods not covered by rail or bus systems. The Via platform provides local operators with planning and analytics tools needed to manage a micromobility fleet, where intelligent mapping and route planning are critical for successful deployment. Citymapper provides a mapping platform (an alternative to the likes of Google Maps) that makes it easy to compare available transit options. The deep insights into citizen mobility journeys (time, traffic, transportation methods, etc.) will provide an additional data layer for Via to continue its reinvigoration of the public transit experience.
Jeff Cook is a managing director at Shea & Co., an investment bank that has advised in more than 20 gov tech deals (investments and exits) in the past 5 years.