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Gov Tech Biz Quarterly Roundup: Q2 2023 With Jeff Cook

This quarter might just be the low point of the year, but there are reasons to think things will pick up in the second half of 2023. The second quarter saw deals with BS&A, Clariti, PayIt and more.

Closeup on businessman holding a card with Q2 QUARTER 2 message, business concept image with soft focus background and vintage tone
In the future, I believe we will look at Q2 2023 as the “bottom” for gov tech transaction activity. Q2 was expected to be slow, but maybe not this slow, registering the lowest quarterly deal volume in the three years I have been writing this column. The quarter had fewer deals, and the deals done were, on average, smaller than usual. We were also missing the large blockbuster transactions that buoy the headline value. In Q2, we tracked $625 million in deal value, a fraction of the $2.2 billion from Q1 2023 and the $2.9 billion from Q2 2022 a year prior. Transactions fell into two major themes this quarter: small tuck-in acquisitions by private equity-backed businesses and growth investments in transportation and “smart city” businesses (e.g., NoTraffic). There was a notable new “platform” investment by Serent Capital in BS&A.

Despite the slow quarter, I still think there is a chance that 2023 ends up being a good year in line with my prediction that we surpass 2022’s $7.4 billion in deal activity. Earlier this year, many bankers, investors and others involved in tech M&A predicted a resurgence of activity in the second half of this year. Activity is coming back at a gradual pace, but the floodgates have not fully opened, with a good portion of the anticipated activity being pushed back to early 2024. That said, there are more businesses “in market” right now than there have been all year and reception has generally been positive. As those sale processes conclude with (hopefully) successful outcomes, they likely will serve as the data points sellers on the sideline need to test the market.

The volume metrics above and transactions below are for deals announced between April 1, 2023 and June 30, 2023.


BS&A Receives Significant Growth Investment from Serent Capital

Why it matters: Serent Capital, a lower-middle market private equity firm with a track record of investing in gov tech businesses, announced a significant growth investment in BS&A, an ERP software provider for municipalities. With more than 2,000 customers ranging from small municipalities to large cities, BS&A offers solutions for financial management, assessing and tax, payroll, utility billing and community development. The investment will support BS&A’s geographic expansion and drive adoption of the company’s best-in-class cloud-based products. With the Serent investment, BS&A joins a growing list of private equity-backed ERP businesses, including Springbrook, Edmunds, CentralSquare and gWorks.


Clariti Acquires Camino Technologies

Why it matters: Clariti, a Vancouver, B.C.-based company that provides permitting and licensing tools for public agencies, acquired Camino Technologies, a Bay Area-based company that also focuses on permitting and licensing. Clariti also offers a community development platform, while Camino’s products include an application portal, business and cannabis licensing and virtual inspection solutions. The acquisition enables Clariti to extend its product offering to governments of all sizes. The combination of Clariti and Camino marks another deal in response to the acceleration of citizen services transitioning online and highlights how gov tech businesses are aggressively searching to expand their existing product offerings and target customer bases.

Schneider Geospatial Acquires PeopleGIS

Why it matters: Schneider Geospatial, a portfolio company of Align Capital Partners, has acquired PeopleGIS, a Massachusetts-based GIS asset management solution focused on public works and permitting and licensing. The acquisition of PeopleGIS, including its renowned SimpliCITY solutions, marks Schneider’s entry into the asset management space. That signals a crucial step in Schneider’s path toward an all-in-one land and asset management GIS platform that serves state and local governments nationwide. The deal marks Schneider’s second add-on since the company was acquired by Align in June 2022. In February 2023, Schneider acquired the WebGUIDE Xtreme product of Applied Data Consultants, a Wisconsin-based GIS software platform.

PayIt Acquires Sovereign Sportsman Solutions

Why it matters: The pace at which citizen services transition online is accelerating, and outdoor recreation experienced substantial growth during the pandemic as more people sought outdoor activities. This combination sparked a wave of activity in the outdoor recreation market in Q1 2022, with Brandt Information Services’ acquisition of Terra Technology Group and Tyler Technologies’ acquisition of US eDirect. With the same trends still largely in place, PayIt, a leader in digital customer experience and integrated payments for governments, announced the acquisition of Sovereign Sportsman Solutions. The Nashville-based company focuses on licensing and permitting for hunting, fishing, RVs, boats and event management. The deal is PayIt’s first acquisition and follows a $90 million growth investment from Macquarie Capital Principal Finance in August 2022.

Raptor Technologies Acquires SchoolPass

Why it matters: Raptor Technologies, a leading provider of school safety software backed by Thoma Bravo and JMI Equity, has acquired SchoolPass, a fast-growing company specializing in cloud-based attendance, dismissal automation and visitor and emergency management for K-12 schools. By integrating SchoolPass’ products with its school safety suite, Raptor aims to enhance its ability to meet ever-changing school safety needs. This is Raptor’s third add-on after the acquisition of LobbyGuard Solutions, a visitor management and front office automation system, in June 2019 and CPOMS, a student well-being platform, in October 2021. The acquisition follows Singlewire’s acquisition of Visitor Aware, a visitor check-in and student management platform, in February 2023 and signals that school safety remains a top priority for education and government leaders.

Miovision Acquires Global Traffic Technologies

Why it matters: Miovision continued the expansion of its intelligent transportation portfolio through the acquisition of Global Traffic Technologies for $107 million. Global Traffic Technologies is best known for its market-leading emergency pre-emption and traffic signal solution, Opticom. The deal re-solidified Miovision's position at the forefront of an active transportation market after acquiring RapidFlow Technologies in October 2022 and MicroTraffic in February 2023. Global Traffic Technologies will elevate Miovision's capabilities in reducing traffic congestion and enhancing the efficiency of emergency response and public transit. Global Traffic Technologies, formerly one of eight operating companies within Vontier Corporation (NYSE: VNT), will bring Miovision's presence in North America to nearly 100,000 intersections.

Maltego Receives Investment from Charlesbank Capital Partners

Why it matters: Private equity firm Charlesbank Capital Partners announced an investment in Maltego, a leading intelligence platform used by the FBI, Interpol, financial institutions and half the Dow 30. Maltego provides data integration and graphical link capabilities enabling security experts, journalists and researchers to mine, merge and map a diverse range of investigative data. The investment from Charlesbank will be used to accelerate product development, expand international sales and solidify Maltego’s position as the go-to tool for complex investigations. Overall, the investigation market remains active through businesses such as PenLink, LeadsOnline and the merger of Grayshift and Magnet Forensics. The activity will likely persist given the high fragmentation and opportunity to build a comprehensive platform that spans from investigation to court resolution.

NoTraffic Raises $50M

Why it matters: Transportation management has been one of the most active segments within gov tech the past few years due to a range of factors including the U.S. infrastructure bill and the global focus on reducing emissions. NoTraffic, an AI-based traffic management platform, has secured $50 million in Series B funding led by M&G Investments with participation from VNV Global, UMC Capital, Grove Ventures and others. The company plans to expand production, research and development and market presence in countries such as Germany, Italy, Japan and the U.K. The Tel Aviv-based platform uses smart sensors, cloud computing and data analysis tools to optimize the flow of vehicles, bicycles and pedestrians through intersections.

ClimateAi Raises $22M

Why it matters: ClimateAi raised a Series B funding round led by Four Rivers Group, with participation from Neotribe’s Ignite Fund, Yaletown Partners and several existing investors. The San Francisco-based company’s platform uses AI and machine learning to help companies and governments minimize near- and long-term climate risk exposure. ClimateAi’s solutions provide climate-related insights that help users with water use, crop management, disease outbreak anticipation and pest spread prediction. Following a Series A round in 2021, the company experienced a significant increase in customers. This round will primarily be used to accelerate expansion into countries such as India and Japan, grow the company’s workforce and continue AI research.

City Innovate Raises $12.4M

Why it matters: City Innovate, a company specializing in providing documentation, analytics and other related solutions to state and local agencies, raised a $12.4 million Series A round led by SJF Ventures, with participation from ServiceNow (NYSE: NOW), TFJ Capital and Nellore Capital. Additionally, City Innovate announced a partnership with ServiceNow, a global leader that offers a wide range of enterprise IT service management and business process automation solutions. The partnership involves three end-to-end City Innovate solutions built on the ServiceNow platform to accelerate document-centered workflows in government procurement, contracts, grants and budgeting processes, while maintaining compliance. The balance between efficiency and accountability is crucial as governments strive to keep up with rapid digital transformation and increasing citizen expectations.
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.