Eye on M&A

BIO-key buy might be first of many for InterAct

Public safety provider has a long list of acquisition targets

The $11 million purchase of BIO-key International Inc.’s law enforcement division is likely only the first of several to come for InterAct911 Mobile Systems Inc.

Just four days after the Aug. 14 announcement, a research note from mergers and acquisitions intelligence provider mergermarket Ltd. reported that InterAct “has a long list of targets, mostly U.S.-based with less than $20 million in revenue,” although the company “would also look at a larger company.”

InterAct Mobile Systems Chairman and CEO Andrew “Flip” Filipowski added that “InterAct is open to prospects from investment bankers,” mergermarkets said.

Winston-Salem, N.C.-based InterAct’s parent company, InterAct911 Corp., announced in November that Foundation Capital and Bay Partners had joined investor SilkRoad Equity and provided a $28 million equity round of capital to fund an expansion of worldwide direct sales and marketing efforts, strategic acquisitions and new product development.

SilkRoad Equity, of which Filipowski is also CEO, acquired InterAct in 2005. InterAct has about 250 employees, annual revenue of $50 million to $55 million, and customers in 46 U.S. states, in addition to a presence in Great Britain, India and the Netherlands.

Its flagship InterAct Connections Framework suite of public safety and homeland security tools includes a computer-aided dispatch (CAD) program, geographic information system, records management system and Next Generation 911 phone controllers, which likely will allow use of text messages and phone video as part of 911 calls.

Although the tools are common among law enforcement departments, they are not relegated to state and local government. The Army recently installed InterActCAD and InterActGIS at Fort McPherson and Fort Gillem near Atlanta to manage and respond to emergency calls, pinpoint caller location and dispatch appropriate personnel, InterAct said.

The BIO-key acquisition is a good fit because the company has a longstanding relationship with InterAct and its technology is a part of InterAct Connections Framework. The BIO-key buy adds the following wireless capabilities.

  • MobileCop, a wireless messaging application for in-vehicle laptop PCs, lets police officers search federal, state and local databases.
  • PocketCop, a wireless application that can be loaded on a smart phone, lets police search databases for vehicle registration, outstanding warrants and other data.
  • MobileRescue, a CAD application, links fire and emergency response personnel with MobileCop and PocketCop users.
  • MobileOffice lets police officers collect data on traffic stops, car crashes and other field data.
  • InfoServer is server-side software for managing MobileCop, MobileRescue and PocketCop clients.

InterAct could be gearing up for another capital raise of $25 million to $30 million in the coming year, according to the mergermarket report.

SilkRoad Equity holdings include another Filipowski start-up, information technology talent management tools provider SilkRoad technology, of which Filipowski is CEO. Despite the economic environment, the company raised $54 million in equity in May 2008 and expanded its worldwide direct sales footprint, opening offices in Singapore and Sydney. In November, it acquired software-based training system developer VTN Technologies Inc.

Filipowski was also the founder of Platinum Technology, which he sold in 1999 to Computer Associates International Inc. for nearly $4 billion.

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