West Coast-based private equity firm K1 Investment Management has acquired communications compliance, archiving and analytics provider Actiance. The firm plans to merge Actiance with Smarsh, its own archiving and compliance platform, according to an announcement made Wednesday morning. Together the combined company will support more than 100 different content and messaging types and expand the markets they serve.
“If you look at our customers today, especially on the high end, they are challenged with the explosion of content that’s coming from these new communication channels,” said Kailash Ambwani, CEO of Actiance. “Not a day goes by when there isn’t some new messaging app that’s emerging, new collaboration app.”
Both companies provide their prospective services for compliance and archiving, but there are some key differences that make them complementary, said Stephen Marsh, founder, chairman and CEO of Smarsh.
Actiance has been focused more on the capture of content from inside an organization, including instant messages and social media. And that deployment model was very attractive to large financial institutions. Although Smarsh has the capture technology to collect messages, it has more of an emphasis on the archival of information and what you do with it after it’s captured, such as the workflow, supervision and search tools.
“Actiance tended to get a larger share of large banks, where we would probably get more of the mid-market and smaller firms, who might not, for example, be able to deploy some of those Actiance solutions for capture,” Marsh said.
One of the biggest challenges facing compliance departments is the ever-growing list of content types they need to support.
“Now they’re under pressure to enable apps like WhatsApp and WeChat for their financial advisors because their clients are using those applications,” Ambwani said. “Yet how do you do that and maintain compliance? How do you do that and ensure that you’re not engendering reputational risk, etc.?”
Until recently, mobile was the biggest challenge for compliance, and most organizations didn’t archive text communications, Marsh said.
“They viewed the task as being very challenging, and there was not one good solution that addressed all of the different permutations for how a company might need to capture text messages or mobile communications,” he said. “What we’re seeing now is it is much, much easier to address that.”
Marsh believes the merger makes them better-positioned to address organizations’ needs for mobile compliance.
The combined company will have more development resources and a broader sales and marketing organization. They’ll also be able to add supervision features more quickly than they could in either of their respective businesses.
“For our customers, what this represents is a scaled, pure-play company that has the technology that addresses today’s challenges for them,” Ambwani said.