Financial terms were not divulged, but Cross Match Holdings (sponsored by Francisco Partners) acquired 100% of the shares of DigitalPersona. Both companies are privately held and will retain their independent names for the foreseeable future.
Cross Match is traditionally strong in government and law enforcement markets, while DigitalPersona has an established presence in commercial markets, such as retail and banking. This means the two companies have developed product portfolios with little direct overlap. The companies hope that combining them will result in a “greater than the sum of the parts” situation.
The newly-merged organization will comprise more than 300 employees and have a strong global presence in the government, financial, retail, defense, law enforcement and corporate markets.
Rich Agostinelli, current CEO of DigitalPersona, will assume the same role for the combined company, which will continue to be headquartered in Palm Beach Gardens, Florida. Prior to DigitalPersona, Agostinelli spent ten years in the identity management industry, most recently as president of the biometrics division of L-1 Identity Solutions.
“While the two companies will operate independently in the near-term, the complementary nature of their products, technologies and global support organizations should make for a relatively quick and seamless integration,” Agostinelli said.
Mike Kohlsdorf, operating partner for Francisco Partners, said the complementary technologies and geographic strengths of each company made the merger attractive for Cross Match. “Cross Match is strong in multimodal biometric technologies and government solutions. DigitalPersona is strong in identity verification and the commercial sector, especially finance, retail and healthcare,” he said. “So, the fit is highly complementary.”
“The merger also broadens our global coverage, especially in Asia and Europe,” added Kohlsdorf, who served as interim CEO of Cross Match prior to the merger.
The companies noted that consolidation in the biometric market has left the world with few mid-sized companies dedicated to biometrics-focused innovation. This merger, they said, joins two independent biometrics companies and makes them financially and technically stronger. As a result, the companies say that Cross Match and DigitalPersona engineers will soon begin to collaborate to create new highly differentiated biometrics-based solutions.
This latest deal is exciting for the biometrics industry, but does not come as a major surprise - and indeed has been rumoured for the last month.
The combination of the two companies appears to make a great deal of sense on paper and is a strategy that has echoes in the way that L-1 Identity Solutions was formed and subsequently bought by Safran Morpho.
Francisco Partners is a technology-focused private equity firm and swooped in and purchased almost 100% of Cross Match’s stock in 2012 – while promising “new technology, strategic partnerships and acquisitions”.
As is typical for many equity firms, the focus is on growing the company, realising a good return and then selling. At Francisco Partners this process appears to take around four to seven years – we are now almost two years into this process. This latest move gives the biggest indication yet, as to what strategy might be moving forward.
While the immediate focus will now be about achieving synergy and growth we don’t expect this to be the last acquisition by this group over the next few years.