Ross Wilkers


Tyler Technologies' deal for MicroPact moves needle on federal presence

Once mainly focused on state and local government, software provider Tyler Technologies is viewing the federal marketplace as a natural extension of that work and is using acquisitions to make that happen.

The Plano, Texas-based company said Friday it has agreed on a $185 million cash deal to acquire Herndon, Virginia-based MicroPact, a provider of case management and business process management software to government agencies, from private equity firm Arlington Capital Partners.

This transaction is the second-largest in Tyler’s 53-year history and second with implications for the federal market as it comes a year after last year’s acquisition of Socrata, a data-as-a-service platform company.

But MicroPact is the “first company with much scale in the federal space that we’ve acquired,” Tyler Chief Financial Officer Brian Miller said in an interview. The company has made close to 40 acquisitions in its history, five last year including Socrata.

Whereas Socrata had $25 million in sales at the time of that deal, MicroPact posted $70 million in revenue last year and touts at least 350 public sector customers including the Justice and Treasury departments, Social Security Administration and NASA.

Miller said MicroPact’s revenue is split on an almost 50-50 basis between federal and state and local, while Socrata’s federal sales represented one-fifth of total revenue. Tyler recorded $840.7 million in revenue for 2017.

Historically, Tyler’s state and local presence has been more tilted toward cities, counties and school districts. The company’s software portfolio is intended for several functions in running the business of government such as public safety, the legal system and financial resource management.

Tyler has grown its state government presence in recent years with offerings for property tax management and court filing systems, Miller said.

“We view the public sector pretty broadly,” Miller told me. “Certainly federal is a logical extension, a big piece of the public sector market, and we’ve eyed it for some time but we wanted to enter the federal space through a consistent model with our existing model which is more product-based.”

That model is based on bringing commercial-off-the-shelf software tools to government agencies. MicroPact’s flagship product under that umbrella is “entellitrak,” a case management and business process management tool which is intended for use in a cloud environment so clients can quickly implement and configure it.

MicroPact also brings to Tyler a partner network of large businesses such as Accenture, Amazon Web Services, Booz Allen Hamilton, CACI International, General Dynamics’ IT services division and NTT Data.

This is a shift of sorts for Tyler as it has typically not done much work with partners in the state and local government business and instead used its own professional staff.

Partners in MicroPact’s ecosystem “build the solutions on top of” their platform, Miller said, then “do the configurations and some of the professional services work.”

“Sometimes MicroPact provides software as a subcontractor to one of the larger integrators, but they’ve been able to leverage those relationships and that is definitely an increasing part of their business,” Miller added.

A 469-employee company, MicroPact was founded in 1997 by CEO Kristoffer Collo as MicroPact Engineering. Arlington Capital acquired the former Iron Data Solutions LLC in 2011 and four years later combined that company with MicroPact to create a larger company.

Tyler’s acquisition of MicroPact is anticipated to close on March 15 pending federal regulatory approvals. Spurrier Capital Partners was financial adviser to MicroPact on the transaction.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at Follow him on Twitter: @rosswilkers. Also connect with him on LinkedIn.

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