How one company saved its federal business

Acquisitions are good: they add capabilities, new customers and contracts, hard workers and a boatload of new revenue. But for one company, an acquisition almost cost them their entire federal business.

That is, before the company turned its federal business into a wholly owned subsidiary, thereby avoiding any roadblocks that would come from an international acquisition.

Before the acquisition, Belcamp, Md.-based SafeNet Inc. was a large security and products firm that had around $350 million in revenue in fiscal 2014. Its roughly 1,500 employees worked all around the globe, both in the United States and in other countries such as India, Israel and Germany.

But in the summer of 2014, Gemalto, an Amsterdam-based international digital security company, approached SafeNet, and the two companies began talks about an acquisition.

At that point, SafeNet had split revenue—about 85 percent was commercial work, and around 15 percent was government work, said Kirk Spring, president of SafeNet Assured Technologies, the subsidiary created after the acquisition.

Since Gemalto is based in the Netherlands, the acquisition had to be approved by the Committee for Foreign Investment in the United States, or CFIUS.

SafeNet was given three options, Spring said: create a proxy company, sell off the government business, or cease doing business with the federal government all together.

Spring and his team went with option one. “That’s how SafeNet Assured Technologies came about,” he said.

SafeNet Assured Technologies, with its 60 employees, works a little different than the old SafeNet Inc. did. The new company has two businesses, Spring said. The first is an authentication products business that offers authentication products as well as a cross-domain solution. Those products are developed and maintained by SafeNet Assured Technologies, so there is no tie to Gemalto there.

The second business is a reselling business where the company resells products that are still under control of the old SafeNet (which is now operating as Gemalto). The company is also underway developing a third business related to hardware security modules for the federal government, Spring said.

Gemalto already has a hardware security module program, and SafeNet Assured Technologies’ product will act as a parallel product, but Spring emphasized that the two will not be related.

As for the reselling business, SafeNet is reselling Gemalto products, but the company will be protecting its customers identities, Spring said. The company has a broad customer base.

“If you name a government agency, we’ve probably sold something to them,” Spring said, listing the Defense Department, military forces, the Homeland Security Department, FBI, Veterans Affairs and intelligence agencies.

The company also is starting to see some attention from state and local authorities, he said.

Moving forward, the company will continue to build out its businesses—particularly its authentication business—and will do so organically, Spring said. The reselling business is doing very well, he added. The company has an encryption product that is popular due to the number of breaches occurring around the nation.

As for new business, SafeNet Assured Technologies will have its sights on the mobile market, Spring said. There are also opportunities for the company in the cloud arena, he added, particularly with those agencies who have not adopted it due to security concerns.