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Two compliance companies merge to build a $100M firm

Two compliance companies merge to build a $100M firm
From TechCrunch - November 15, 2017

Once upon a time there were two compliance companies.Smarsh was owned by Los Angeles-based private equity firm, K1 Investment Management. It worked with mostly SMBs. Another called Actiance worked with larger companies like the worlds biggest banks. This is the story of how K1 is bringing these two companies together.

Both companies are focused on archiving and compliance around communications. Originally that meant email, but over time its shifted to social, chat, mobile and other forms you see in the modern enterprise. Both help companies archive and organize this correspondence, and if there is a legal action, create a workflow to help compliance and legal get at the information law enforcement, lawyers or regulators are asking to see.

According to IDC, the market for governance, risk and compliance, which is where these two companies fall, is projected to reach almost $12 billion by 2021. Big enterprise companies in this market include the usual suspects like IBM, Oracle, OpenText, HPE and others.

When you have two companies doing fairly decently in the same sector, and youre a PE firm, the math and logic says if you put them together, you could have a bigger more successful company. Thats basically the reason behind K1 going out and buying Actiance, which was founded in 1998 and raised over $43 million. K1 already owned Smarsh and by merging the two companies, they believe they could generate $100M in annual revenue. (K1 did not disclose the terms of the deal.)

Each company has been growing 30 percent, year over year alone, but does combining them mean they can continue that level of growth together? We are about to find out.

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